Asian stocks chip selloff deepens as AI funding fears spread

The Asian stocks chip selloff resumed on Monday, Oct. 19, as investors carried Friday's technology-led slide on Wall Street into a new week. Japan's Nikkei fell 1.2%, Taiwan dropped 1.4% and South Korea slipped 0.4%, with chipmakers and AI-linked names again doing most of the damage.

What happened

The pressure came early. Japan's Nikkei 225 was down 2.15% shortly after the open, while the broader Topix lost 1.17% and Korea's Kospi fell 1.6%, according to CNBC-TV18. Losses narrowed through the morning, but Tokyo stayed under pressure from SoftBank, Advantest and Tokyo Electron, AFP reported. Taipei, Shanghai, Sydney, Singapore and Wellington also fell. Hong Kong was shut for a holiday.

Mainland traders were also watching Beijing. Last week officials leaned on listed companies and state funds to buy equities after a tech slide sent the CSI 300 to its weakest point since August 2025, CNBC-TV18 reported.

The moves extend a rough stretch. The Nikkei lost 5.4% last week and South Korea shed more than 14%, Reuters data carried by CNA show. In New York, the PHLX Semiconductor Index dropped 11.4% over the week, its longest losing streak since 2008, a run we tracked in our chip index losing streak coverage.

Other markets offered some relief. S&P 500 futures rose 0.7% and Nasdaq futures 1.0%. The 10-year Treasury yield slipped 4 basis points to 5.0525% after its biggest weekly fall in more than eight months. Brent crude lost 1.7% to $107.95 a barrel and U.S. crude fell 0.8% to $100.62 after President Donald Trump waived some new Russia sanctions. Gold gained 0.4% to $4,181 an ounce.

Why it matters

The worry has shifted from demand to financing. "Investors are increasingly questioning whether future revenue can justify the capital and financing required for data centers, chips and power infrastructure," said Rodrigo Catril of National Australia Bank, quoted by AFP.

AMP economist My Bui pointed to the bond market. "Rising government bond yields and wider corporate credit spreads are increasing financing costs, making it harder to borrow, refinance, and keep the AI infrastructure build-out going," she said, according to Reuters.

Neocloud debt is part of that story. CoreWeave stock has lost around 30% in October while some of its bond yields spiked, AFP noted, echoing the stress in CoreWeave's credit default swaps. For Asia, where chip and equipment makers carry heavy index weights, that question about AI returns is what turns a U.S. tech wobble into an Asian stocks chip selloff.

Currencies reflected the mood elsewhere. The euro eased to $1.1232, close to last week's 16-month low of $1.1113, on French political worries, while the dollar held near 157.89 yen.

What's next

Earnings now take over. Meta reports on Wednesday, and Lam Research, Texas Instruments, Tesla, Netflix, Procter & Gamble and General Motors also report this week. Goldman Sachs expects five AI hyperscalers including Meta to lift combined capital spending to about $1.2 trillion next year, so spending guidance will matter as much as profits. Overall S&P 500 earnings are still expected to grow about 30%.

The Federal Reserve is in its blackout period before its Oct. 28 policy decision, and bets on a second straight rate hike jumped after last week's hot inflation data, AFP said. Until hyperscalers confirm their budgets, the Asian stocks chip selloff is likely to track every swing in U.S. tech and bond yields. Chinese data offered a partial offset after third-quarter growth came in at 4.5%, slightly above forecasts.