AI trade reversal pierces Asia’s star picks-and-shovels stocks

Investors have turned their attention to the trillions of dollars being borrowed to build AI infrastructure.

A deepening sell-off in US technology stocks is exposing a new vulnerability in Asia’s artificial intelligence trade: mounting financing costs could choke off the spending needed to sustain the boom, threatening earnings across a supply chain that has powered the region’s stock-market rally.

The pressure intensified last week as oil surged to US$110 a barrel for the first time since May, stoking inflation concerns, and investors turned their attention to the trillions of dollars being borrowed to build AI infrastructure.

An eight-session rout in US semiconductor shares – the longest since 2008 – wiped roughly 16% off the sector’s benchmark, while the Nasdaq 100 suffered its worst week since April 2025.

For Asia, where chipmakers and hardware suppliers that make printed circuit boards, precision components and manufacturing equipment have been among the biggest beneficiaries of the AI frenzy, the implications could be significant heading into the Oct 19 open.

A Goldman Sachs Group basket of regional AI hardware stocks tumbled 11% last week, its steepest decline since mid-July.

The sell-off showed little sign of abating despite an upbeat revenue outlook from Taiwan Semiconductor Manufacturing Co (TSMC), underscoring how concerns over AI spending are spreading across the hardware supply chain.

Nan Ya Plastics, a maker of printed circuit board materials and the best-performing stock on the MSCI Asia-Pacific Index in 2026, tumbled 12% from a record high. Rival Unimicron Technology, the index’s second-best performer, fell 14% in a week, while Samsung Electro-Mechanics, which makes an array of electronic components, plunged 23%.

“Financing costs are like gravity for the AI boom,” said Jian Shi Cortesi, a fund manager at GAM Investment Management in Zurich.

“Rising borrowing costs could make infrastructure projects harder to finance and delay spending. Even a delay could trigger a reset in Asian suppliers’ earnings expectations and valuations.”

The concern is no longer just whether demand for AI chips will hold up. It is whether hyperscalers and neocloud operators can keep financing the infrastructure needed to deploy them – and whether the expected returns will justify the scale of investment.

Bonds of neocloud provider CoreWeave sank to levels signalling distress last week as investors questioned whether AI demand and revenue could support the borrowing behind its expansion. Its shares slumped 12% on Oct 16, resulting in the stock’s worst week since November, with a 25% drop.