Asian stock markets fell sharply on Friday as investors sold technology and semiconductor shares following months of strong gains driven by enthusiasm for artificial intelligence.
South Korea experienced some of the most volatile trading. The Kospi fell by at least 8% during the session, triggering a 20-minute circuit breaker intended to slow panic selling, before closing 5.8% lower.
South Korean Trading Temporarily Halted
The halt was the third time a circuit breaker had been activated in South Korea during the week and the fifth time in 2026. Under the Korea Exchange rules, trading can be paused when the Kospi declines by at least 8%.
Major semiconductor companies Samsung Electronics and SK Hynix contributed heavily to the decline. The two companies account for more than half of the benchmark’s market value after their shares rose rapidly alongside demand for memory chips used in AI data centres.
The Kospi had gained sharply earlier in the year, making it particularly vulnerable to profit-taking when investors became more cautious about technology valuations.
Japan’s Nikkei 225 also closed more than 4% lower. Shares in technology investment company SoftBank dropped 12.5%, extending losses among businesses closely associated with AI infrastructure and startups.
Markets in Taiwan and mainland China also declined as the sell-off spread across the region.
Apple Price Increases Add to Cost Concerns
The losses followed a 6% decline in Apple shares on Thursday, the company’s largest one-day fall in more than a year. Investors reacted after Apple raised prices across several Mac and iPad models because of higher memory and storage costs.
Microsoft shares also fell after it announced that Xbox console prices would increase worldwide from August 1. Microsoft said prices would rise by $100 for 512GB models and $150 for versions with 1TB of storage.
The announcements raised concerns that the AI infrastructure boom is increasing component costs for consumer electronics companies. Higher retail prices could weaken demand for computers, tablets and gaming consoles, potentially affecting the chipmakers supplying those products.
Investors Question Returns From AI Spending
Large technology companies are expected to spend hundreds of billions of dollars on data centres, processors and other AI infrastructure during 2026.
Investors are increasingly examining whether revenue from AI products will grow quickly enough to justify that spending. Companies with strong earnings and clear demand may continue attracting investment, while those relying mainly on expectations of future AI growth could face greater scrutiny.
The sell-off does not necessarily indicate that investors have lost confidence in AI over the long term. It shows that they are becoming more selective after rapid share-price gains and are taking profits from some of the year’s strongest-performing technology stocks.
Featured image credits: Magnific.com
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