Asian Stocks Slip as AI Chip Valuation Fears, Rising Oil Prices Weigh on Markets

Asian stock markets mostly declined on Wednesday as investors remained cautious toward artificial intelligence (AI)-related shares following a sharp semiconductor selloff, while rising oil prices and escalating geopolitical tensions in the Middle East kept risk appetite under pressure.

Investor sentiment remained fragile after the U.S. launched fresh strikes on Iran and tightened sanctions on Iranian oil exports following attacks on commercial shipping in the Strait of Hormuz. Elevated crude prices renewed concerns over inflation, even as some semiconductor stocks attracted bargain hunters. Wall Street closed lower overnight, although Nasdaq 100 and S&P 500 futures edged higher during Asian trading.

Technology stocks attempted to recover after Tuesday’s broad AI-driven selloff, triggered by Samsung Electronics’ blockbuster earnings, which prompted investors to reassess whether semiconductor valuations remain justified by future profit growth.

Analysts at OCBC said artificial intelligence is likely to remain the dominant investment theme through the second half of 2026. However, they expect investors to become more selective, favoring companies capable of delivering consistent earnings rather than those trading at stretched valuations.

South Korea’s semiconductor sector rebounded, with SK Hynix climbing 5.1%, LG Innotek gaining 2.1%, and Samsung Electronics rising 0.5%. Despite the recovery, the KOSPI fell 0.9%, extending losses after its strong first-half rally.

Taiwan’s AI supply chain also stabilized. Hon Hai Precision advanced 0.4%, while Taiwan Semiconductor Manufacturing Co. traded nearly flat after the previous session’s decline, helping the Taiwan Weighted Index rise 0.2%.

In Japan, Murata Manufacturing jumped 4.3% and TDK gained around 2%, though Sony slipped 0.5%. The Nikkei 225 lost 0.6%, while the TOPIX eased 0.3%.

Beyond technology, investors monitored inflation data from Thailand, Taiwan, and the Philippines, which generally pointed to easing price pressures. However, Maybank expects the Bangko Sentral ng Pilipinas to raise interest rates by another 25 basis points in August due to persistent core inflation.

Chinese stocks were mixed ahead of June inflation data, while Hong Kong’s Hang Seng gained 1.1%. Australia’s ASX 200 dropped 1.3% after Reserve Bank of Australia officials warned that recurring global supply shocks could keep inflation expectations elevated. Meanwhile, New Zealand’s central bank raised interest rates by 25 basis points as expected.

Markets are now focused on the Federal Reserve’s June meeting minutes, China’s inflation report, Malaysia’s policy decision, and next week’s U.S. inflation data, alongside corporate earnings that will determine whether the AI investment boom can continue supporting lofty semiconductor valuations.