London (AFP) - Asia’s tech-heavy stock markets slumped Tuesday on fresh worries about the outlook for the AI investment boom, while a retreat in oil prices helped support stocks outside the tech sector.

“Investors are increasingly worried that cracks are starting to show in the AI trade,” said Dan Coatsworth, head of markets at AJ Bell.

The selling came after Hock Tan, chief executive of the US semiconductor giant Broadcom, likened the AI buying frenzy to gambling.

“A lot of investors have no clue what they are investing in,” Tan told a conference in Singapore, saying they “set very extreme expectations only to find out that it’s almost like they are in a casino”.

The International Monetary Fund weighed in on the debate, warning of an AI correction at the beginning of its annual meeting in Bangkok.

The boom in artificial intelligence – and the related rush to manufacture semiconductors and build data centres – has provided a boost to global growth despite geopolitical pressures including the Middle East war.

But “growing evidence suggests that AI capabilities can be delivered at lower investment levels… or that potential economic gains may not be as large as expected”, the IMF said in its Global Financial Stability Report.

The IMF forecast that global growth in 2026 would slow less than previously expected because of advanced economies’ “resilience” in the face of war-fuelled energy prices, but warned that low-income countries remained vulnerable to the supply shock.

On the trading floors, South Korea’s Kospi stocks index tanked 5.5 percent by the close as chip titans SK hynix and Samsung took a beating.

The decline also followed reports that China’s CXMT had made progress on new technology to boost memory chip density, which rival firms have also been racing to achieve.

The company is aiming to release a new server-memory product based on the structure by the end of the year, the reports said.

“China continues to narrow the competitive gap with US companies across AI models, humanoid robotics, memory and other parts of the technology supply chain,” said Chris Weston, head of research at the brokerage Pepperstone.

“Its ability to develop increasingly competitive products at lower costs is challenging established assumptions around market share, pricing power and the durability of margins,” he added.

Japanese stocks also slumped, with chipmaker Kioxia tumbling more than 13 percent on the Nikkei 225, which lost 1.8 percent.

“The tech sector is taking it on the chin,” said Trade Nation analyst David Morrison, noting that the CXMT development suggests that going forward supplies of a key type of memory chips might not be as tight as many investors had thought.

“The news also provided investors with an excuse to cut their exposure to AI-adjacent companies,” Morrison added.

The tech-heavy Nasdaq Composite shed 0.3 percent as trading got underway, even as the blue-chip Dow added 0.7 percent.

European stocks were mostly higher in afternoon trading, getting support from a drop in oil prices that came even as Yemen’s Houthis stepped up their attacks on Saudi Arabia, fanning tensions in the Middle East and raising further concerns about supplies.

The third-quarter earnings season kicked off in earnest Tuesday with JPMorgan Chase boosting profits by six percent. While that missed analyst expectations, its shares rose 0.8 percent in early New York trading.

Shares in Goldman Sachs climbed 1.4 percent after the bank beat expectations with a 33 percent jump in profit.

- Key figures at around 1330 GMT -

New York - Dow: UP 0.7 percent at 52,220.05 points

New York - S&P 500: DOWN less than 0.1 percent at 7,802.10

New York - Nasdaq Composite: DOWN 0.3 percent at 27,157.50

London - FTSE 100: UP 0.5 percent at 10,704.54

Paris - CAC 40: FLAT at 7,831.43

Frankfurt - DAX: UP 0.1 percent at 25,302.05

Seoul - Kospi: DOWN 5.5 percent at 6,035.35 (close)

Tokyo - Nikkei 225: DOWN 1.8 percent at 67,777.52 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 24,345.22 (close)

Shanghai - Composite: UP 0.1 percent at 3,800.86 (close)

Brent North Sea crude: DOWN 1.3 percent at $105.31

West Texas Intermediate: DOWN 0.9 percent at $92.92 per barrel

Euro/dollar: UP at $1.1200 from $1.1156 on Monday

Pound/dollar: UP at $1.3252 from $1.3207

Dollar/yen: DOWN at 158.29 yen from 158.68 yen

Euro/pound: DOWN at 84.52 pence from 84.48 pence

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