TRaders are awaiting US inflation data due later Friday, after a strong jobs reading earlier in the week (ANGELA WEISS) · ANGELA WEISS/AFP/AFP
Most Asian stock markets fell Friday following another tech-led plunge on Wall Street as investors reassess their vast AI investments, while attention was also turning to US inflation data later in the day.
After last week’s asset-wide volatility, a sense of calm has descended on trading floors over the past few days, helped by forecast-busting US jobs figures that eased worries about the world’s top economy.
However, growing concern about the hundreds of billions spent on artificial intelligence infrastructure — and the bundles more announced in the past few days — have fanned speculation about when, if ever, companies will see a return.
That has been compounded this month by the release of new tools that can perform crucial tasks in a range of fields, including legal, sales and marketing, hammering companies worried about competition.
Analysts said that has seen traders reassign investments within the AI area, with the main beneficiaries being chipmakers and other firms needed to build infrastructure.
“Developments in AI, particularly around the rollout of various AGI products, are only vaguely understood, which makes the ability to price future risk and certainty… something of a guess,” said Pepperstone’s Chris Weston, referring to artificial general intelligence, the mooted next stage of AI when computers could outperform humans across a wide variety of tasks.
And Chris Beauchamp, chief market analyst at IG, added that “investors are rotating away from labour-intensive, fee-based business models that could face margin pressure from AI automation”.
“This represents a significant shift from earlier AI enthusiasm, which focused primarily on technology enablers rather than potential losers,” he added.
“The speed at which these concerns are spreading suggests markets are becoming more sophisticated in their analysis of AI’s impact. Rather than a blanket assumption that AI benefits all companies, investors are now making sector-by-sector assessments of winners and losers.”
Those concerns have weighed on US tech in recent months, with Apple, Amazon and Facebook parent Meta among those feeling the pinch, while upstream companies — many based in Asia — are enjoying healthy gains.
That saw Wall Street retreat Thursday, with the Nasdaq more than two percent down, while the S&P 500 shed more than one percent. Both indexes are down for the year so far. The Dow also dropped.
Asia was also largely in the red, though the losses were less pronounced, while Seoul — which has led global markets this year — was up thanks to advances in heavyweight Samsung Electronics and rival SK hynix.