Asian stock markets tumbled on Friday, driven by a selloff in technology companies as investors worried that recent share price gains had gone too far.
Trading on South Korea’s Kospi was temporarily halted after the benchmark index fell 8%, triggering a mechanism to curb panic selling. The index closed down 5.8%.
This follows a sharp drop in Apple’s stock price on Thursday after the company announced it would raise prices for iPads and MacBooks due to a surge in computer chip prices.
Some investors are also concerned about the hundreds of billions of dollars that big tech companies have spent this year building artificial intelligence (AI) infrastructure.
David Makaryan, senior partner at investment firm Alpha Pacific Group, said traders are reassessing valuations of technology stocks, with some taking profits after a rally in recent months.
“The long-term investment case for AI remains compelling, but investors are becoming much more selective about which companies can justify the valuations the market places on them,” Makaryan said.
Elsewhere in Asia, Japan’s Nikkei 225 index closed more than 4% lower as shares of technology investment giant SoftBank fell 12.5%.
Other major indices in the region, including Taiwan and mainland China, also fell sharply.
Stock trading in South Korea has been particularly volatile in recent months.
The 20-minute suspension of the KOSPI on Friday was the third time a so-called circuit breaker was triggered this week and the fifth time this year.
Apple shares fell 6% in the U.S. on Thursday, the biggest one-day decline in more than a year.
Microsoft’s stock price also fell after announcing a price increase for its Xbox game console, citing rising component prices.
The move has raised concerns that rising component prices could hurt device sales, slowing demand for computer chips.
Raymond Woo, an analyst at Kyoto University Innovation Capital, said the high costs of commercializing AI tools are increasingly being passed on to consumers.
Woo said this “naturally raises questions” about how quickly demand for these tools will match investments in AI, and whether the valuation of technology stocks today is realistic.
