Asian Sell-Off Hits Tech Stocks as AI Valuations Face a New Challenge

Asian tech stocks sold off sharply as profit-taking hit overheated AI positions, with the Korean KOSPI plunging 10% and Japan's Nikkei dropping 3.5%. The decline marks a reversal in sentiment around artificial intelligence valuations despite semiconductors holding a 4.3% monthly gain. NVIDIA, the bellwether AI stock, fell 5.6% in the selloff.

The broader market context shows mixed signals: the S&P 500 has pulled back 3.3% from its all-time high but remains up 9.1% year-to-date. Precious metals and cryptocurrencies came under pressure alongside the tech rout, driven by US dollar strength that weighed on alternative assets.

The KOSPI's double-digit drop represents one of the sharpest single-session declines for the index, reflecting heightened concerns over stretched valuations in the AI trade. Japan's more moderate 3.5% Nikkei decline suggests regional divergence in how markets are repricing technology exposure. Despite the volatility, the 4.3% monthly gain in semiconductors indicates the sector hasn't fully unwound its recent rally.