SINGAPORE – Recent declines in technology stock prices have raised some caution among brokers and investors, but the sentiment remains one of measured concern rather than outright panic. After an extraordinary rally that propelled markets to new highs, particularly in the technology sector, the downturn has now extended into a second day, with stock exchanges in Seoul and Tokyo approximately 5% off their recent peaks. Nasdaq futures dipped by 0.2% following a sharp 2% drop in the index on Tuesday.
The most significant declines were seen among the top performers, such as chipmaker Nvidia, which has surged to prominence, becoming the most valuable company globally. Investors are currently questioning the momentum of this growth rather than the underlying faith in artificial intelligence technologies.
“The selloff appears to be largely positioning-driven, with recent outperforming names taking the worst of the move,” noted Jon Withaar, a senior portfolio manager at Pictet Asset Management based in Singapore. The pullback was triggered by an unexpected negative response to the strong financial results reported by Palantir Technologies, a firm specializing in data solutions and artificial intelligence. Shares of Palantir plummeted nearly 8% on Tuesday and continued to decline by an additional 3% in after-hours trading.
Nvidia’s shares also fell nearly 4% on Wall Street, marking a decline of about 7% from their recent peak. This trend of selling extended to suppliers and competitors within the AI supply chain across Asia, indicating a broader market adjustment.
“It’s fairly blanket selling in the risk-leverage part of the market which to us looks like short-term profit taking,” remarked Angus McGeoch, head of equities distribution for Barrenjoey in Hong Kong. He observed that fund managers, focused on performance outcomes for 2025, are reluctant to exit their positions entirely but are mindful of market fluctuations.
Despite the current wobble, markets have largely brushed aside concerns related to elevated interest rates, persistent inflation, trade disputes, and global economic volatility. These factors have prompted discussions about the sustainability of the artificial intelligence boom and whether it might be a bubble poised to burst.
Notably, the Nasdaq’s 2% drop follows a remarkable recovery, with the index having risen more than 50% from its lows in April. Major Wall Street executives, including Ted Pick from Morgan Stanley and David Solomon from Goldman Sachs, have acknowledged the apprehension in the market, hinting at the possibility of a substantive pullback during recent discussions at an investment summit in Hong Kong.
While the market is experiencing turbulence, the long-term prospects of the technology and AI sectors remain promising, suggesting that a recovery could be just around the corner. Investors are advised to stay vigilant and opportunistic as they navigate the current landscape.