The global tech rally faltered as Asian shares, including Korean heavyweights Samsung and SK Hynix, dropped significantly. The selloff was triggered by a slide in US AI shares after Broadcom's disappointing full-year guidance on AI chip sales.
Asian Tech Stocks Tumble
The tech rally that was driving the markets to record highs fizzled on Friday as Asian shares came under pressure tracking losses in AI shares on Wall Street. Korean tech heavyweights Samsung and SK Hynix fell up to 8 per cent taking the index down 4 per cent indicating that investors may be cautious after a record boom drove these companies to a trillion dollar valuation.
Broadcom's Weak Guidance Sparks Selloff
The selloff in tech shares came after US chip giant Broadcom reported its second quarter earnings clocking a revenue of $22.19 billion. Some analysts had forecast a stronger revenue for the company in the second quarter. The stock was bludgeoned for its weak guidance as CEO Hock Tan didn't raise company's full-year target of $100 billion in AI chip sales.
Ripple Effect Hits Other Tech Giants
The selloff in Broadcom spread to other tech heavyweights as well with shares of Arm Holdings dropping over 4 per cent and Micron Technology slipping nearly 8 per cent.
Background: The AI-Driven Market Rally
Markets in US and Asia have seen a blistering rally driven by the frenzy around AI stocks. The big-bang capex expansion plans and the data centre boom along with heavy spending on compute infrastructure brought the AI stocks front and centre of the investor interest. American chipmaker Micron recently entered the trillion-dollar valuation club as investors poured in money riding on the semiconductor wave. Japan's Nikkei 225 reached its all-time high of 68,402.13 on June 3 as investors flocked to AI and tech stocks. The SoftBank Group surpassed Toyota Motor to become the most valuable company in Japan on the back of massive AI investments.
Mixed Close on Wall Street
The Nasdaq composite closed down less than 0.1 per cent on Thursday after the disappointment from Broadcom. The semiconductor and software maker's shares tumbled 13 per cent. The Dow closed 875 points up, or 1.7 per cent, after rally in healthcare and financial stocks. The S&P 500 closed 0.4 per cent up, but the tech segment was down 1.4 per cent as chip stocks dropped. (ANI)
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)