Technology stocks across Asia fell on Thursday, extending the weakness seen on Wall Street as investors continued to reassess valuations in the AI sector.

The sharpest losses came from semiconductor companies. South Korea’s SK Hynix dropped nearly 10%, while Samsung Electronics fell more than 6%. In Japan, SoftBank Group lost 4.4%, Tokyo Electron declined more than 5%, Advantest fell 2.1%, and memory chipmaker Kioxia slid almost 9%. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, also traded lower.

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The decline followed a strong rally a day earlier, highlighting the heightened volatility that has become a defining feature of AI-related stocks.

AI Investment Outlook Remains Intact

Despite the market pullback, analysts say the sector’s long-term fundamentals remain unchanged.

J.P. Morgan said recent selling across Asian technology shares does not signal a weakening AI investment cycle. While investors have questioned whether major technology companies can sustain record levels of AI spending, the bank does not expect hyperscalers to scale back their capital expenditure.

“Stepping away from the share price moves, we do not see any fundamental indicators that signal meaningful weakness in the next 6-12 months,” the bank said.

Demand Continues To Support The Sector

A separate report from S&P Global pointed to continued strength in technology demand, driven largely by artificial intelligence and defence spending.

According to the report, global output in the technology equipment sector expanded in July at its fastest pace since May 2021, while software and IT services also recorded their strongest growth in ten months.

The latest market moves suggest investors remain sensitive to short-term shifts in sentiment. Even so, analysts continue to view AI as one of the strongest long-term drivers of demand for semiconductor manufacturers and technology companies.