AI Stock Selloff Deepens as Inflation and Debt Fears Hit Asia
3 min readThe AI trade took its hardest hit of the year on Thursday, October 15, as the AI stock selloff that began on Wall Street spread across Asia. South Korea’s Kospi plunged 7.9% and trading in Seoul was halted for 20 minutes, while Japan’s Nikkei 225 dropped 5%. The names that powered this year’s rally fell the most.
What set it off
The trigger came from the US. Consumer prices rose 3.7% in the year to September, up from 3.4% in August and above the 3.6% economists expected, reviving bets on another Federal Reserve rate increase. The 10-year Treasury yield, which touched 5.35% earlier this month, its highest level since 2002, sat at 5.11% on Thursday. Higher yields shrink the value investors place on profits that sit years in the future, and few sectors depend on distant profits more than AI.
Debt is the second worry. Yields on some CoreWeave bonds approached 15% this week and its shares fell sharply, according to CNBC. CEO Mike Intrator called the reaction irrational and pointed to the company’s contract backlog, but the episode reminded investors that much of the AI buildout runs on borrowed money.
The Asia rout
Samsung Electronics lost 11.4%, SK hynix fell 12%, and Kioxia dropped 13.1%. SoftBank Group, which trades like a leveraged bet on AI thanks to Masayoshi Son’s commitments, slid 9.4%, and Tokyo Electron fell 7.8%. Foreign investors sold $1.8 billion of Korean shares on Thursday morning alone, taking October’s outflow past $10 billion. Even TSMC, which reported record profit the same day and called AI demand very strong, closed about 2% lower in Taipei.
On Wednesday in the US, the S&P 500 fell 1.1% and the Nasdaq 1.9%, with Nvidia down 3.2%, Broadcom down 3.1% and AMD down 5.7%, per CNN. Nvidia now sits roughly 9% below its record high. A Financial Times report that Anthropic’s quarterly revenue reached $16.8 billion, up about 50% from the prior quarter, did little to help: strong growth, but slower than some backers had modeled.
Why it matters
Korea and Taiwan are concentrated in a handful of chipmakers, which amplified the gains on the way up and now amplifies the losses. An IMF report on Thursday warned that an AI investment correction would hit Asia disproportionately. Morningstar’s Lorraine Tan described a possible mismatch between the market’s growth expectations for tech and what may actually arrive.
None of this means demand for AI compute has vanished. TSMC’s numbers say the opposite. What has changed is the price of money, and the question for the next few weeks is whether sticky inflation and rising funding costs force AI builders to slow their spending plans.