SoftBank Plunges Over 9% as Asia Chip Stocks Track AI Sell-Off

The global sell-off in artificial intelligence (AI)-linked chip stocks spread from U.S. markets to Asia, severely impacting Japanese technology giants. SoftBank Group shares plummeted over 9%, with other major chip manufacturers in the region also experiencing significant declines. This downturn reflects growing investor skepticism about whether the massive AI investments justify current valuations, despite Taiwan Semiconductor Manufacturing Company's (TSMC) robust second-quarter earnings and upgraded growth outlook.

The selling wave began with profit-taking in U.S. chip stocks and mounting concerns over the sustainability of AI spending, then extended to Asian markets. In Japan, SoftBank Group (9984.T) dropped over 9%, while chip testing equipment maker Advantest (6857.T) slid 9.4%, and chip manufacturing equipment maker Tokyo Electron (8035.T) lost around 9%. In South Korea, SK Hynix saw declines exceeding 11%, and Samsung Electronics (005930.KS) fell over 7%. This indicates that markets are entering a correction phase following the rapid ascent in the AI sector.

Taiwan Semiconductor Manufacturing Company (TSMC) (TSM) reported a record 77.4% surge in net profit for the second quarter of 2026 and raised its full-year revenue growth forecast from over 30% to over 40%. The company also announced plans to invest an additional $100 billion to expand its chip production capacity in the U.S. However, even these positive announcements failed to calm the markets. Some investors interpreted TSMC's higher capital expenditure forecast as a signal of potential overinvestment in the industry, further fueling selling pressure.

These developments had a significant impact on markets. The Philadelphia Semiconductor Index (^SOX) experienced a sharp decline, while the Nasdaq Composite (^IXIC) retreated by 1.5%. The MSCI Asia Pacific Index also slid 0.3%. The semiconductor stocks have become a dominant force in global equity markets, causing any downturn in the sector to be felt far beyond the chip industry itself. Investors are questioning whether the massive investments in AI infrastructure can generate returns quickly enough.

In the broader economic context, AI infrastructure spending has been the defining trade of 2026, with semiconductor stocks more than doubling since late 2022. However, after this rapid rally, the sustainability of current valuations has come under scrutiny. Analysts note that semiconductors now account for 20% of the S&P 500 index's weighting, significantly higher than the 8% seen during the dot-com bubble, indicating extremely crowded positioning. Furthermore, geopolitical risks, such as the U.S.-Iran conflict and rising oil prices, are also contributing to risk aversion and increasing concerns about inflationary pressures.

Regarding market expectations, analysts characterize the current sell-off as a cyclical correction rather than a fundamental shift. Nevertheless, they warn that valuations have run ahead of fundamentals. According to Matt Maley, chief market strategist at Miller Tabak, the action in chip stocks remains the most important issue for the stock market. If a strong and sustainable rebound is not observed in this sector soon, it could raise significant warning flags. Investors will closely monitor upcoming earnings reports from SK Hynix and other chipmakers to see if the AI-driven memory demand cycle is decelerating.