Asian technology stocks followed the decline of US chip stocks! SoftBank fell more than 9%, Kioxia plummeted more than 15%

Affected by the new round of plunge in US chip stocks, Asian technology stocks saw a sharp decline on Friday, as concerns over spending on artificial intelligence (AI) further intensified. As of the close on Friday, SoftBank fell more than 9%, chip equipment maker Tokyo Electron fell more than 8%, Advantest fell more than 10%, and Renesas Electronics fell more than 8%. Japanese storage chip maker Kioxia also plunged more than 15%. Earlier, a federal jury in Texas ruled on Thursday that the company infringed on a patent related to computer storage technology by Viasat and ordered it to pay $229 million. Meanwhile, the Korean market was closed for a public holiday. After months of significant gains, global AI-related stocks have continued to experience a sharp pullback recently. With the accelerating investment in AI infrastructure, investors are increasingly questioning whether the current high valuation levels can be sustained. Apart from the Japanese stock market, A-shares and Hong Kong stocks also weakened. The downward trend in Asian markets continued the weak performance of US technology stocks overnight, with the Nasdaq Composite Index falling by 1.47% and chip stocks under pressure once again. The VanEck Semiconductor ETF fell by nearly 4%, Arm (ARM.US) fell by over 5%; Micron Technology, Inc. (MU.US), AMD (AMD.US), and Broadcom Inc. (AVGO.US) all fell by over 5%, while SK hynix (SKHY.US) listed in the US plunged by over 13%. Despite Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) raising its full-year capital expenditure forecast from $52 billion to $56 billion to $60 billion to $64 billion, investors are now focusing on whether the industry's aggressive investment cycle is becoming increasingly difficult to sustain. Andrew Jackson, strategist at Ortus Advisors, said, "US technology stocks and the AI sector are facing a comprehensive sell-off once again, with the strongest performing stocks recently experiencing further declines. The reason is that yesterday's financial report from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in Asia was not considered sufficient by the market to support further upside for the sector, but instead sparked concerns about overspending in the AI field." He added that this round of selling reflects a concentrated unwinding of crowded positions in hot AI trades, rather than a deterioration of the industry's long-term fundamentals. XFUNDs trader Louis Condrajatov stated that the recent pullback reflects that trading in the semiconductor sector has become too crowded under the ongoing AI trend. He said, "Currently, the semiconductor sector alone accounts for approximately 20% of the S&P 500 Index, a percentage that is extremely difficult to sustain in the long term." He pointed out that during the 2000 Internet bubble period, the weight of the semiconductor sector in the S&P 500 Index was slightly above 8%, while the historical average level usually ranges from 2% to 5%. He also mentioned that although corporate earnings momentum remains strong, as investors reassess overly high valuation levels, this upward trend may become increasingly difficult to sustain in the future. He said, "Earnings growth momentum has been very strong, but it is mainly concentrated in the semiconductor industry, and as valuations gradually return to reasonable levels, this growth momentum may start to slow down." Additionally, the latest fund manager survey report released by the Wall Street financial giant Bank of America Corp shows that global investors who are aggressively buying stocks should actively consider reducing exposure to risky assets. The core assessment of the Bank of America strategy team is not that the fundamentals of global technology stocks or the AI computing industry are about to enter a downward trajectory, but rather that investors' extremely optimistic sentiment, bullish stock positions, and strong profit expectations, coupled with the excessive pace of continuous valuation expansion, have severely overshot the medium-term growth prospects in about 1-2 years, leading to a significant deterioration in the marginal risk-return profile of risky assets, which is reflected in fund managers' cash holdings dropping from 4.1% to an extremely low level of 3.6%, and the bullish/bearish index reaching a pessimistic score of 9.4 out of a full score of 10. Therefore, the Bank of America Corp strategy team, led by Michael Hartnett, known as the "most accurate strategist on Wall Street," suggests taking a wait-and-see approach for now, as well as reducing stock and high beta exposure as much as possible. Their latest prediction essentially serves as a reminder to investors that while the long-term trend of the AI computing power theme remains intact, the extreme crowding in semiconductor trading, extreme leverage positions, low cash buffers, overpriced medium- to long-term growth prospects, and risks of cooling capital spending may suppress the summer market rally and amplify any slight negative news that triggers a valuation pullback.