Doubt over AI investment weighs on Asian markets
Investors question whether the anticipated returns from artificial intelligence can cover the high financing costs.
Listen to this article
There is no audio version yet. Request one and an AI voice will read the article aloud.
Read by an AI voice.
Asian stock markets were mostly lower on Monday amid renewed doubts about financing the AI boom. Technology stocks were particularly under pressure, as investors looked ahead to new corporate results.
The broad Asia-Pacific share index excluding Japan fell by 0.2 per cent on Monday, according to Reuters. Japan’s Nikkei lost 0.7 per cent. The move follows a weak week for technology stocks, making investors more cautious about companies heavily reliant on investment in data centres and chips.
The immediate cause is not a single new decision by a regulator or central bank. Investors are primarily weighing whether revenues from AI services are growing quickly enough to recoup the enormous spending on computing power, data centres and semiconductors.
According to My Bui, an economist at asset manager AMP, there have long been fears that AI revenues will be insufficient to offset the initial investments. Higher bond yields and wider credit spreads are also making borrowing and refinancing more expensive. This could particularly affect companies financing their expansion with significant amounts of debt.
The decline is not evidence that the AI sector is collapsing. This price movement alone does not show how the revenue and profitability of AI companies will develop.
New quarterly figures from major technology companies could provide more insight into the returns on AI investments. Those results could determine whether the current move is mainly a temporary shift or the beginning of a broader revaluation of AI shares. Dutch companies could also be affected if financing costs, chip prices or investment plans change.
Also show the region and a close-up
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
The current market movement and the market causes cited are based on a Reuters report dated 19 October. Interpretations of a possible structural shift are explicitly presented as uncertain.
Editor's note
The current market reaction and the index movements mentioned were reported by Reuters. There is no firm indication of a structural collapse; the text has therefore been phrased cautiously.Sources
- Asian stocks slip as AI-financiering zorgen oproept — Reuters via Investing.com