Global tech sell-off deepens as inflation fears and AI debt worries hit markets

Global technology shares fell sharply on Thursday as investors reacted to hotter-than-expected US inflation data and renewed concern about debt in the artificial intelligence sector. The sell-off spread across Asia and Wall Street, with semiconductor and AI-linked stocks among the hardest hit. South Korea and Japan saw some of the steepest declines, while major US indexes also closed lower in the previous session.

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In South Korea, the Kospi 200 fell more than 8% overnight to a six-month closing low, briefly triggering circuit breakers that halted trading at points during the session. SK Hynix dropped nearly 11%, while Samsung Electronics fell about 9.5%. In Japan, the Nikkei 225 lost 4.9% after an 11% slump in Kioxia and a 10% fall in SoftBank, which has a large investment in OpenAI, the company behind ChatGPT.

The moves followed US inflation data showing prices rose 3.7% in September, the fastest pace since the consumer price index reached 4.2% in May. That reading revived expectations that the US Federal Reserve may raise interest rates again, with some traders pricing in another increase before the end of the month. On Wall Street, the Nasdaq Composite fell 1.9% and the S&P 500 dropped 1.1%, their worst performances since July.

The latest decline matters because it combines two pressures that have been weighing on markets for months: higher borrowing costs and doubts about the sustainability of the AI investment boom. Companies tied to chips, cloud computing and AI infrastructure have attracted heavy capital spending, but investors are increasingly sensitive to whether those bets can be financed if rates stay elevated. The sell-off also shows how quickly a US inflation surprise can ripple through global markets, especially in sectors that have become central to recent equity gains.

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Analysts said the move reflected a turbulent 24 hours in which a strong US consumer price reading was followed by mounting fears around the AI trade. They also noted that the inflation data were not driven only by fuel costs, but by broader increases across the consumer basket. That has added to concern that price pressures may be more persistent than markets had hoped, limiting the scope for near-term monetary easing.

The International Monetary Fund warned earlier this week that a sharp fall in AI share prices could spread through global markets and threaten financial stability. What remains unclear is whether the current drop is a short-lived correction or the start of a deeper reassessment of valuations in the technology sector. Investors will be watching for further US economic data, Federal Reserve signals and whether the selling pressure extends into other major markets.

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