AI Stocks Rout Spreads to Asia as Nasdaq Enters Correction on Data Center Fears

A two-day sell-off in artificial intelligence and semiconductor stocks deepened Friday, with Asian technology shares tumbling sharply after the Nasdaq Composite sank 5.5% and closed more than 10% below its recent peak — entering correction territory — amid investor concerns over the sustainability of AI infrastructure spending.

The rout was triggered in part by Democrats' sweeping victory in U.S. midterm elections, which raised fears that tighter restrictions on data center development could slow demand for AI chips and related infrastructure.

South Korean chipmaker SK Hynix plunged over 8%, while Samsung Electronics shed 7%. LG Innotek and LG Display fell 10% and 7.7%, respectively, as selling pressure spread across South Korea's technology sector.

In Japan, the losses were similarly steep. Chip-testing equipment maker Advantest plunged 12.2%, while Tokyo Electron slid 7.3%. Technology investment group SoftBank tumbled 11.6%, memory chipmaker Kioxia Holdings fell nearly 10%, and Renesas Electronics declined 7.5%.

On Wall Street, the Philadelphia Semiconductor Index plunged 12.2% during Thursday's session. The iShares Semiconductor ETF fell 3% on Wednesday and another 10% on Thursday. Among individual names, Micron tumbled 17%, Sandisk plunged 22%, and GE Vernova dropped 7%.

Jim Cramer, host of CNBC's "Mad Money," said Thursday that the core problem is a valuation one rooted in uncertainty. "We don't know what to pay for any of the stocks connected to the data center and that's why this moment is so fraught," Cramer said.

Cramer pointed to Nvidia as an illustration of the dilemma. The chipmaker trades at roughly 12 times next year's earnings with an expected growth rate of 70%, which on the surface appears inexpensive. But those projections assume sustained demand for AI hardware. "That's an incredible bargain," Cramer said. "But it is not a bargain if, the following year, it can't grow any further, because the U.S. won't permit new data centers as fast as they do now."

Advanced Micro Devices presented a similar puzzle. Cramer called AMD's latest quarterly results "one of the best quarters I have ever seen" and noted that CEO Lisa Su projected the broader data center market could eventually reach $1 trillion. Even so, Cramer flagged that the stock, which traded at $188 in March, had reached $404 — a level he described as difficult to justify absent certainty about future infrastructure buildout.

Cramer also raised concerns about smaller cloud infrastructure companies including CoreWeave, Iren, and Nebius, which borrowed to finance data center projects that could now face regulatory delays. "That's what I am chiefly worried about," he said. "That's the real problem. That's what could really hurt the stock market."

Despite the sharp declines, Cramer argued the selloff is structurally different from the dot-com collapse of 2000. "Unlike 2000, these are mostly lucrative companies with stocks that went too high," he said, characterizing the decline as "orderly" rather than a systemic unraveling.

He warned, however, that the selloff likely has further to go. "I wish I could say that today's flush was the bottom," Cramer said, before counseling investors to hold sufficient cash rather than panic. "If you have cash you won't panic. You won't be complacent, either. You will be clear-headed and that's how you will lose less money until things get better."

Whether regulatory opposition to new data centers amounts to a permanent constraint or a temporary delay remains the central question hanging over AI-linked equities, and the answer will likely determine when — and at what level — the sector finds a floor.

Disclaimer