Chipmakers across Asia have wiped out more than $2 trillion in market value, yet a stock picked by Investing.com’s AI model defied the sell-off. AbbVie, the US drugmaker, climbed 10.5% in October, a sign that investors are rotating toward defensive sectors as the cost of financing AI infrastructure becomes the central worry.
🔑 Key takeaways
- AbbVie gained 10.5% in October, closing at $285.42 on October 16, just 2.1% below its 52-week high of $291.40.
- The Kospi fell 10.8% on Tuesday, while Samsung Electronics and SK Hynix each lost more than 13% that day.
- The US semiconductor segment logged eight straight losing sessions, its longest streak since 2008.
- Oil at $110 a barrel and rising financing costs for AI infrastructure are weighing on hardware valuations.
A regional rout concentrated in Asia
The reversal was especially violent over just a few sessions. In Seoul, the Kospi slid 10.8% on Tuesday, triggering a 20-minute trading halt (a temporary suspension of trading designed to curb panic selling) after an intraday drop of 8%. Samsung Electronics and SK Hynix both fell more than 13% that same day, following a 14% decline in the previous week.
- Tokyo: the Nikkei 225 gave up 2.0% on Monday, adding to a 5.4% loss the week before.
- Taipei: Taiwan Semiconductor Manufacturing Co (TSMC) issued encouraging revenue guidance, yet its shares still slipped 1.81%.
- Nasdaq: the index lost 5% on October 7, and the title of the world’s most valuable company changed hands in favor of Apple, which has risen roughly 25% so far this year.
The case of SK Hynix is telling. The company listed on the Nasdaq on July 9 at $149, and by October 7 the stock was well below that level, down 7.5% on the session. For a recent listing, the erosion shows how quickly markets have repriced expectations for memory and AI equipment suppliers.
AI financing becomes the new pressure point
The trigger was not a collapse in demand, which most industry players still describe as robust, but the cost of capital needed to fund data centers and compute infrastructure. Broadcom CEO Hock Tan warned that the cost and availability of financing could become a bigger obstacle than chip or capacity shortages.
“The cost and availability of financing could become the biggest obstacle to AI growth”
Hock Tan, CEO, Broadcom
Dan Ives, analyst at Yorkville Ives, framed the dilemma: higher yields raise the cost of funding these buildouts, and investors are right to scrutinize balance sheets and contract structures. Still, he argued that “rates are a financing question, not a demand question.” Chris Beauchamp, analyst at IG, was blunter: “There is little love for tech stocks right now, and investors are selling them at a rather unworthy pace.”
Higher funding costs were amplified by an oil spike that pushed crude to $110 a barrel for the first time since May. That shock revived inflation fears and kept interest rates elevated, raising borrowing costs for the most leveraged players. Arun Sundaram of CFRA Research observed “clear pressure zones in this very specific part of the AI market.”
Key market indicators for the week
| Indicator | Move or level | Period |
|---|---|---|
| Kospi | -10.8% | Tuesday |
| Nikkei 225 | -2.0% | Monday |
| Goldman Sachs Asia AI hardware basket | -11% | Prior week |
| US semiconductor segment | about -16% | Eight-session slide |
| Nasdaq Composite | -1.88% at 26,692.87 points | Session |
| S&P 500 | -1.11% at 7,718.94 points | Session |
| Dow Jones | -0.09% | Session |
| Intel, Applied Materials, Lam Research, Onto Innovation | more than -20% each | October |
In the United States, the turmoil wiped out roughly $1 trillion from the 20 largest AI and chip stocks this week. The Nasdaq 100 posted its worst week since April 2025. CoreWeave, an AI cloud provider, illustrates the fragility of financing: its bonds plunged to distressed levels, and the stock fell 12% on October 16, its worst week since November, with a 25% plunge.
“The cost of capital for CoreWeave is actually going down”
Jensen Huang, CEO, Nvidia, speaking in Stockholm
Huang added that it was “not necessary” for Nvidia to guarantee CoreWeave’s obligations. On X, Elon Musk argued that China would produce “a lot of RAM in 2028,” adding pressure on expectations for memory supply.
AbbVie and InvestingPro’s AI strategies
Amid the storm, InvestingPro’s AI-driven investment model highlighted a sector rotation (capital moving from one sector to another) toward defensive names. Its “Healthcare Heroes” strategy selects up to fifteen health care stocks in the S&P 500 based on momentum, valuation and growth signals. Its lead holding, AbbVie, closed at $285.42 on October 16, valuing the company at $504 billion and leaving it only 2.1% below its 52-week high of $291.40.
In October, fourteen of the fifteen positions in the portfolio rose, with a weighted average gain above 6%. Other InvestingPro strategies also beat their benchmarks, as the table below shows.
| Strategy | 2026 performance | Gap vs benchmark |
|---|---|---|
| Healthcare Heroes | +22.10% | +7.3 points vs S&P 500 Health Care |
| Small-Cap Sprinters | +29.68% | +18.3 points vs Russell 1000 |
| Dominate the Dow | +18.29% | +10.2 points vs Dow Jones Industrial Average |
These results stand in sharp contrast to the chip rout. They nonetheless come from algorithmic selections with a limited track record and do not predict future performance. A pharmaceutical name also benefits from factors of its own, such as steadier cash flows, that have no direct link to the AI investment cycle.
Bulls and bears: the signals to watch
Capital is flowing toward sectors less exposed to AI because of concerns about how infrastructure gets financed. Jian Shi Cortesi, fund manager at GAM Investment Management, put it simply: “Funding costs are like gravity for AI’s rise.” Gartner estimates that more than $3.5 trillion of AI infrastructure spending could be at risk of cancellation by 2030.
“If hyperscalers and cloud providers cannot finance their data center investments, that would translate into weaker orders for Asian enablers such as TSMC, Samsung and SK Hynix”
Vey-Sern Ling, CEO, Union Bancaire Privée
Some investors remain confident. Kunjal Gala, head of global emerging markets at Federated Hermes, said: “We are not worried about the current chip sell-off, because AI demand remains strong.” Dan Ives called the pullback a “buying opportunity,” arguing that the AI infrastructure cycle is still in its early stages. He nonetheless flagged three warning signs to monitor:
- a possible cut in capital expenditure by hyperscalers;
- cancellations of infrastructure contracts;
- a decline in GPU rental rates.
Conclusion: a market reordering its priorities
The Asian chip rout, which erased more than $2 trillion in value, does not by itself undermine the AI thesis. It does show that the sector’s growth now depends on its ability to finance itself at an acceptable cost. AbbVie’s rise of more than 10% in October illustrates a shift toward less cyclical names, without signaling that the AI theme has been abandoned.
Three scenarios stand out for the coming months. In the base case, financing conditions stabilize and demand absorbs margin pressure. In a bullish case, lower rates and an easing in oil revive technology valuations. In a bearish case, a cut in hyperscaler investment would pose a direct risk to Asian semiconductor suppliers.
Sources
- Investing.com, “Up 10% in October: an AI-picked stock defied Asia’s $2 trillion chip rout”
- Yahoo Finance Singapore, Asian stock market coverage
- BBC News, analysis of the tech stock sell-off
- The Straits Times, “AI trade reversal pierces Asia’s star picks and shovels stocks”
- Briefs.co, “AI rout wipes out over $1 trillion from 20 top chip and AI stocks”
- FSMONE, “AI jitters spark a chip rout but Asia’s investment case remains strong”
Cet article est publié à titre informatif et éducatif. Il ne constitue en aucun cas un conseil en investissement. Faites vos propres recherches (DYOR) avant toute décision.
