Global AI Rout Intensifies: Kospi Crashes 7%, US Futures Slide as Financing Worries Mount

The global artificial intelligence stock rout deepened Thursday, with South Korea’s Kospi crashing as much as 7% into bear market territory and triggering circuit breakers, while US equity futures pointed to further losses on Wall Street. The selloff, which ricocheted from Monday’s AI-driven decline in New York, was fueled by mounting concerns over the sustainability of AI investment and signs of slowing growth at marquee AI companies.

As of 6:20 a.m. ET, S&P 500 futures were down 0.3% and Nasdaq 100 futures slid 1.1%, while the Dow Jones Industrial Average futures edged up 0.2%. Small-cap stocks outperformed, with Russell 2000 futures rising 0.3%. The moves followed a session in which the S&P 500 fell 1.1% and the Nasdaq 100 lost 2%, with the Philadelphia Semiconductor Index dropping for a sixth straight day.

The Kospi’s collapse was driven by a rout in memory chipmakers. Samsung and SK Hynix lost around 8% and 10%, respectively, according to Zero Hedge, after China’s CXMT touted progress on a denser DRAM architecture. The broader Asian selloff was compounded by fears that the Federal Reserve may keep rates higher for longer after a hotter-than-expected US inflation reading.

AI Financing Fears Take Center Stage

The latest wave of selling was sparked by a series of negative headlines that shifted investor focus from chip supply constraints to the financing of AI infrastructure. Zero Hedge reported that Broadcom CEO Hock Tan likened AI investing to a casino, warning that financing the buildout, not chip supply, is the problem. Separately, Anthropic’s pre-IPO investor event failed to impress after the company disclosed third-quarter revenue of $16.8 billion, implying slowing growth from the prior quarter.

Adding to the gloom, CoreWeave bonds sank deeper into distress, with the stock falling another 6-7% after imploding 15% the previous day. A Gartner report warning that $3.5 trillion of AI infrastructure spending could be exposed to impairment by 2030 also made the rounds, according to Zero Hedge. Even strong results from TSMC — which guided fourth-quarter revenue to $52.3-54.3 billion, above the street estimate of about $50 billion — failed to dispel the concerns, and semiconductor stocks sold off globally.

Treasuries Rally, Dollar Weakens

Investors fled to safe havens, driving a sharp rally in government bonds. The 10-year Treasury yield tumbled 10 basis points to 5.08%, the lowest since Sept. 23, as odds of an October Fed rate hike slid back to around 30% from a post-CPI intraday peak of 58%. German bunds and UK gilts also rallied about 10 basis points, helped by a pullback in energy prices.

The Bloomberg Dollar Spot Index fell 0.3-0.4%, snapping a four-session winning streak. The Swiss franc led G-10 gains, while the Australian dollar slumped after a weak jobs report. In commodities, Brent crude dropped almost 2% to $104 on the risk-off tone and talk of the US easing shadow fleet sanctions. Gold jumped 1.3% to $4,158, and silver rose 2.1%. Bitcoin slipped 0.6% near $81,200.

Premarket Movers: Mag7 Mixed, Chipmakers Hammered

In premarket trading, the Magnificent Seven were mostly lower, with Apple the only gainer, up 0.8%. Microsoft fell 0.5%, Alphabet 0.8%, Meta Platforms 1%, Tesla 1.4%, Amazon 1.8%, and Nvidia 1.6%. Chipmakers and AI infrastructure names were hit hard: Micron fell 4%, Dell 4%, AMD 3%, Intel 3%, Marvell 4%, and Broadcom 2%. CoreWeave dropped another 3%.

JPMorgan Chase kicked off bank earnings season with a miss in FICC sales & trading revenue, which came in at $5.37 billion versus the $6 billion estimate, according to Zero Hedge. However, the bank boosted its full-year net interest income forecast to about $106.2 billion, above the $105.28 billion estimate, and shares gained 1%. UnitedHealth rose 2% after raising its full-year adjusted profit forecast.

Broader Market Context

The global AI unwind is gaining momentum, with negative headlines piling up. Zero Hedge noted that Goldman Sachs warned of a semiconductor “air pocket” last week. The Philadelphia Semiconductor Index has fallen 12% over the past six sessions. In Asia, the selloff was exacerbated by fears that the Federal Reserve may need to tighten further after the hot CPI print, as summarized by Investing.com.

The US economic data slate Thursday includes September retail sales, producer prices, and weekly jobless claims, along with speeches from Fed officials. The Treasury is set to sell $110 billion of 4-week and $105 billion of 8-week bills. With the AI trade now under broad assault, markets are bracing for further volatility as investors reassess the cost and payoff of the technology’s massive infrastructure buildout.