Global tech stocks dropped sharply on Friday, putting an index of US semiconductor companies on track for its worst week since last year’s “liberation day” rout, as investors dumped some of the biggest winners from the AI boom.
Japan’s tech-heavy Nikkei 225 index sank 4 per cent and China’s CSI 300 weakened 3.6 per cent, following Thursday’s losses on Wall Street.
Nasdaq 100 futures were down 2.2 per cent before Wall Street started trading, after the index lost 1.6 per cent in the previous session. The S&P 500 was on track to fall 1.1 per cent on Friday.
The biggest moves were concentrated in high-flying semiconductor companies – particularly makers of memory chips – in an abrupt reversal for so-called momentum trades, a strategy in which traders and investors bet that the best-performing stocks will extend their gains.
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“Momentum trades have suffered a bruising unwind in the last few weeks, driven mainly by the sell-off in semiconductor and memory stocks,” said Max Kettner, chief multi-asset strategist at HSBC.
Momentum trades, which are popular among hedge funds, run the risk of backfiring if a market changes direction. A Bloomberg index tracking the performance of momentum strategies has fallen 13 per cent since the wider tech rally peaked in June.
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Hao Hong, chief investment officer at hedge fund Lotus Asset Management, put the steep declines in Asian tech stocks down to selling by quant funds, calling it a “momentum crash”.
The Philadelphia Semiconductor index, which tracks the major US chip companies, has already fallen 8.5 per cent this week, its biggest weekly drop since Donald Trump’s “liberation day” tariffs sent the market tumbling in April 2025. The chip index is now 19 per cent below the record high it reached in June.
Micron, the chipmaker whose meteoric rise this year briefly catapulted it into the club of trillion-dollar stocks, has lost more than 25 per cent this month. It was down a further 4 per cent in premarket trading on Friday.
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Memory giants Sandisk and Western Digital both dropped more than 6 per cent in advance of the New York open. In a brutal past month, both stocks have already shed more than 30 per cent of their share price.
The Stoxx Europe 600 fell 0.6 per cent in early trading, with ASML, the world’s biggest maker of chip-manufacturing equipment, down 4.6 per cent.
This week’s losses have come despite strong earnings reports earlier this week from ASML and Taiwan Semiconductor Manufacturing Company.
Michael Zigmont, co-head of trading at Visdom Investment Group, said that the market had “bristled” at TSMC’s forecast for increased capex in the coming years, prompting a bout of nerves over companies overinvesting.
“The lesson is that even if the results are stellar and the outlook is rosy, investors may still have a bone to pick with the situation ... it may be that investors are simply looking for excuses to sell certain stocks,” Zigmont added.
Emmanuel Cau, head of European equities strategy at Barclays, said that “there is a lot of anxiety in the market about ... all the exuberance that we have seen in tech. Whatever went up the most in the first place is going down the most now.”
Cau said the recent moves “seem very technical”, meaning that they are driven by forced unwinding of heavy bets on chip stocks as opposed to more fundamental drivers.
The losses in Asia’s trading session on Friday were concentrated in technology stocks. Japanese chipmaker Kioxia fell more than 16 per cent, and is now down more than half from its June peak. TSMC dropped more than 7 per cent.
Markets in South Korea, which have faced the most volatility from the artificial intelligence (AI) trade, were closed.
In China, AI start-ups Z.ai and MiniMax declined 28.5 per cent and 15.6 per cent respectively after rival Moonshot AI debuted a large language model with capabilities approaching those of cutting-edge US labs such as Anthropic.
The declines “show the uncomfortable reliance of so many markets and so much economic activity on the AI boom at the moment”, said Richard Yetsenga, chief economist and head of research at ANZ.
Even after recent selling, Asia’s chipmakers remain some of this year’s most successful AI trades. Kioxia has risen more than 2,000 per cent in the past year, while TSMC has more than doubled.
Samsung Electronics and SK Hynix, which make the high-bandwidth memory chips used by Nvidia, are up more than 200 per cent and 500 per cent respectively in the past year.
Analysts said geopolitical concerns, including over rising energy prices from a reboot of tensions in Iran and the potential for monetary policy tightening globally, had given investors an opportunity to take profits.
“We’re in an environment where inflation in general goes up easily and comes down with difficulty,” said Yetsenga. – Copyright The Financial Times Limited 2026
