Investors shifted an estimated $3.2 trillion out of semiconductor stocks into major technology and software companies. This capital rotation intensified today, extending a market rout that began last week. Growing concerns over high valuations and the sustainability of the AI infrastructure boom drove the sell-off.
Taiwan Semiconductor Manufacturing Co.’s increased capital expenditure plans and a new low-cost AI model from China rattled investor confidence. Investors are reallocating funds from semiconductors, previously the market's most crowded trade, to other large-cap tech leaders. This movement seeks a new valuation equilibrium for the sector.
South Korea’s Kospi index fell 4.5% as major chipmakers Samsung Electronics and SK Hynix posted steep losses. The global sell-off highlights a critical reassessment of the AI trade that drove earlier market gains.