Asian technology stocks came under fresh pressure on Thursday as concerns over AI investment costs triggered another wave of selling. With chipmakers leading this year's market gains, investors are now demanding stronger earnings and clearer proof that the AI boom will generate lasting profits.
The spotlight is firmly on Taiwan Semiconductor Manufacturing Co. (TSMC), whose second-quarter results could set the tone for global markets.
Key Details
South Korea's KOSPI index dropped 6% on Thursday and is now down 27% from its June peak, with sharp daily swings in Samsung Electronics and SK Hynix highlighting growing uncertainty.
TSMC, the world's leading contract chip manufacturer and a key supplier for Nvidia's AI chips, is expected to report nearly 60% growth in quarterly net profit. However, analysts believe even a strong earnings beat may not satisfy investors unless it is backed by upbeat guidance, following the market's harsh reaction to ASML's recent results.
Meanwhile, geopolitical tensions remain elevated after fresh U.S. strikes on Iran and Tehran's claims that it targeted a gathering of U.S. troops.
Market Reaction
European futures pointed to a flat open, while U.S. stock futures edged 0.1% higher after cooler U.S. inflation data and strong bank earnings lifted Wall Street overnight.
Brent crude has climbed 18% over the past two weeks to around $85 a barrel as Middle East tensions continue to support oil prices.
Markets have also reduced expectations for a July Federal Reserve rate hike, with implied odds falling to about 10% from more than 40% earlier this month.
Why It Matters
For traders, TSMC's earnings could become the next major test for AI-related stocks. Strong results and optimistic guidance may restore confidence, while any disappointment could trigger further volatility across global technology markets.
Investors will closely watch TSMC's earnings, U.S. retail sales, weekly jobless claims, and earnings reports from Netflix, GE Aerospace, U.S. Bancorp, and State Street for fresh direction.
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Source: Reuters
Time: 1:55 PM EEST
