ISLAMABAD: Asian stock markets fluctuated on Thursday as mixed earnings from major technology companies revived concerns that AI investment costs are offsetting optimism about semiconductor demand and South Korean chipmakers’ record profit.
The region’s performance diverged as investors reassessed whether the enormous sums technology companies are spending on AI infrastructure will deliver sufficient returns. Japan’s Nikkei 225 rose 0.3 per cent in early trading, while South Korea’s Kospi fell 2.9 per cent.
Hong Kong and mainland Chinese shares also weakened, reflecting tech and geopolitical volatility, prompting a mixed session on Wall Street.
Alphabet, Microsoft results divide investors
US technology shares came under pressure after Alphabet, Google’s parent company, disappointed investors with its latest results and advertising performance.
Its shares plunged about 10 per cent in after-hours trading, raising fresh questions about the company’s growth prospects and heavy investment in AI infrastructure.
Microsoft offered a more encouraging picture. Its results showed stronger-than-expected revenue and profit, supported by its Azure cloud-computing business, helping its shares gain in after-hours trading.
The contrasting reactions underscored a growing split in investor sentiment: companies showing strong demand and earnings growth, as against those facing questions about revenue growth, profitability, or spending, are coming under pressure.
Investors are increasingly examining whether AI-related revenue can justify the capital expenditure required to build data centres, expand computing capacity and develop advanced software.
The scale of that spending has also raised questions about borrowing requirements and the potential risks of financing expansion in an environment of elevated interest rates.
Chip demand remains strong
Semiconductor shares continued to attract attention after South Korean manufacturer SK Hynix reported exceptionally strong third-quarter results, driven by demand for memory chips used in AI systems.
The company’s earnings lifted its shares nearly 11 per cent on Wednesday, while Samsung Electronics also rallied sharply.
However, Samsung’s subsequent results failed to sustain the optimism.
Samsung reported third-quarter operating profit of 107.4 trillion won, equivalent to about $80.5 billion, a year-on-year increase of 783 per cent.
Despite the record result, its shares fell more than 5 per cent in Asian trading after the figures fell short of market expectations.
The contrasting performances highlighted that strong underlying demand for AI hardware is no longer enough, by itself, to guarantee gains in technology stocks.
Investors are also scrutinising valuations, earnings forecasts and companies’ ability to turn demand into sustainable profits.
Federal Reserve adds to uncertainty
Monetary policy remained another consideration after the US Federal Reserve held interest rates steady on Wednesday.
Two policymakers dissented in favour of an immediate increase, highlighting continuing differences over the inflation outlook.
Investors are watching forthcoming US economic data for clues about the future path of interest rates. Higher borrowing costs can make expensive technology investments less attractive and increase the financial burden on companies expanding their AI infrastructure.
Attention is now turning to earnings from major US companies, including Amazon and Intel, which could provide additional evidence about consumer demand, cloud-computing growth and the semiconductor industry’s outlook.
READ ALSO: Asian Stocks Rally as AI Optimism Lifts Chipmakers
For Asian markets, technology shares’ direction remains particularly important because of the region’s significant exposure to semiconductor manufacturing and electronics exports.
The latest trading session suggests that investors remain interested in the AI growth story but are becoming more selective about which companies can convert investment into lasting earnings growth.
Asian equities are therefore likely to remain sensitive to corporate results, spending forecasts and interest-rate expectations as investors assess whether the technology boom can sustain its momentum.
