By Ankur Banerjee
SINGAPORE (Reuters) – Sharp falls in technology stock prices call for caution, but not yet panic, say brokers and investors who have taken advantage of a runaway market to hit record highs and stretched valuations.
Selling extended for a second day on Wednesday, leaving the Seoul and Tokyo stock markets about 5% below Tuesday morning’s highs. Nasdaq futures were down 0.2% after the index fell 2% on Tuesday.
Hardest hit were the biggest winners in a rally that took chipmaker Nvidia from a niche player to the world’s most valuable company. For now, it is speed and not market confidence in artificial intelligence that is in question.
“The selling appears to be largely driven by positioning, with stocks that have recently outperformed taking the biggest hit,” said Jon Withaar, senior portfolio manager at Pictet Asset Management in Singapore.
There was no obvious trigger for the pullback, but it began with an unexpected negative reaction to the strong financial results of Silicon Valley data and artificial intelligence company Palantir Technologies.
Shares of the darling market finished down nearly 8% on Tuesday and fell another 3% in extended trading.
Nvidia shares fell nearly 4% on Wall Street on Tuesday, down about 7% from last month’s high, while suppliers, competitors and companies up and down the AI supply chain took a beating in Asia on Wednesday.
“This is a pretty broad sell-off in the risk-leveraged part of the market, which to us looks like short-term profit-taking,” said Angus McGeoch, Barrenjoey’s head of equity distribution for Asia in Hong Kong.
He said fund managers with an eye on their results for 2025 would be quick to escape the bearish tides at this time of year, but were not yet looking for a massive exit.
“Obviously (they) don’t want to give up much, given that it’s been a good year… but if the market looks like it’s going to pick up again, then I don’t think it would take much to get people involved again.”
‘A WOBBLE’
For months, markets have weathered concerns about high interest rates, stubborn inflation, trade unrest and an uneven global economy, leading to questions about whether the artificial intelligence boom is a bubble ready to burst.
To be sure, the Nasdaq’s 2% decline on Tuesday follows a rise of more than 50% from April’s lows.
Still, Wall Street executives Ted Pick of Morgan Stanley and David Solomon of Goldman Sachs expressed some of the markets’ unease and raised the prospect of a pullout at an investment summit in Hong Kong.
