$500 billion wiped out: Global chip sell-off spreads from Wall Street to Asia

A sell-off in some of the world's biggest semi-conductor stocks spanning across Wall Street and Asia has wiped out over $500 billion in market value as investors choose to take profits off the table amidst concerns of frothy valuations.

South Korea's equity benchmark KOSPI, which has been the biggest gainer among all indices across the Asia-Pacific, slumped over 6% on Wednesday, November 5, with losses led by Samsung Electronics and SK Hynix, both of whom fell as much as 6% in initial trading before staging a recovery from the lows. The two stocks have risen over 80% and 200% so far in 2025 respectively.

Over in Japan, Advantest Corp. fell over 10%, impacting the performance of the Nikkei 225 index. TSMC, the world's largest contract chip manufacturer also fell over 3%. The selling pressure in these stocks, coupled with the sell-off in the Philadelphia Semiconductor index on Tuesday has wiped out nearly half-a-trillion of combined market capitalization.

The Philadelphia SOX gauge is trading near 28 times estimate forward earnings, compared with its five-year average of less than 22 times.

AI-led stocks have taken benchmark indices on Wall Street and some of the Asian indices to record high levels. The stocks have continued to defy multiple concerns regarding stretched valuations and concerns over interest rates staying higher for longer.

The Wall Street meltdown on Tuesday was triggered by shares of Palantir, which fell over 8% despite an earnings beat. The stock has risen 175% so far in 2025 and trades at a one-year forward price-to-sales multiple of over 80 times, making it the most expensive stock on the S&P 500. An underwhelming guidance from Nvidia rival AMD also failed to enthuse investors.

“It’s a sea of red across broad markets, and one that offers a gloomy and damp portrayal of risk,” said Chris Weston, head of research at Pepperstone Group. “We need to remain open-minded to the possibility that this could still further build. Simplistically, there aren’t many reasons to buy here.”

Goldman Sachs Group Inc.’s Retail Favorites Index slid 3.6% Tuesday, roughly triple the loss in the S&P 500 Index.

“I think it’s a necessary and, to some extent, healthy correction,” said Xin-Yao Ng, a fund manager at Aberdeen Investments. “There’s an AI bubble, not at the stage of bursting yet, but if the share price trajectory of some of these AI stocks continues, it will not take long to get into the final stage.”

(With Inputs From Agencies)