Shares of Japanese memory chip maker Kioxia Holdings plunged more than 16% on Friday as investors unleveraged previously accumulated leverage in tech stocks amid concerns about the sustainability of the AI-driven rally. Asian stock market benchmarks generally declined, with AI-related stocks experiencing a sharp sell-off. The Nikkei 225 index fell more than 6% at one point, hitting its intraday low in over a month; the Taiwan Weighted Index closed down nearly 6.5%. South Korean stocks were closed for a holiday. Stock indices in Australia, Hong Kong, and Singapore also declined.
Kioxia briefly hit its daily limit down, dragging down the Tokyo stock market. As a major beneficiary of the AI boom, memory chip maker Kioxia's market capitalization has surged this year, reaching a peak of 60 trillion yen (approximately US$369.5 billion). However, on Friday, with a sharp drop in its share price, Kioxia's market capitalization shrank to 28 trillion yen. Compared to its intraday all-time high reached on June 22, its share price has more than halved.
JPMorgan's quantitative strategy team stated that the market has recently seen a resurgence of excessive pessimism, with views such as "the AI boom is about to end" and "the AI bubble is bursting" gaining renewed attention. In its latest report, the team pointed out: "Although the supply and demand adjustment of AI concept stocks may be nearing its end, those AI stocks that have risen based on market sentiment and capital may still need more time to truly bottom out after these pessimistic narratives have been fully released."
