AI hype takes a heavy blow: Samsung crashes, crypto exchanges blocked and investors sound the alarm

The euphoria surrounding AI took another hefty blow this week. Asian equities were hit hard on Tuesday after US semiconductor stocks had already lost substantial ground on Monday evening. There was a modest recovery on Wednesday morning, but investors are growing increasingly anxious about sky-high valuations, mounting competition from China and a string of geopolitical tensions hanging over the markets like a dark cloud. Crypto stocks in Asia also took their share of the pain.

Kospi

The technology sector in particular found itself in the firing line. In South Korea, the Kospi index plunged by as much as 6.5% on Tuesday, while chip giants Samsung Electronics and SK Hynix slumped. For years the two companies were the firm favourites of investors looking to cash in on the explosive growth of AI, but those same shares are now suddenly viewed with suspicion.

The reason? The market is starting to question whether the enormous expectations around AI have run too far ahead of themselves. Memory chip makers are still benefiting from strong demand, but investors know that the sector is highly cyclical. Today there may be severe shortages, yet tomorrow the threat of oversupply looms again. That uncertainty is driving sharp swings in share prices.

KuCoin and BitMart

As if that were not enough, the crypto sector has been dealt another setback. South Korea’s Financial Intelligence Unit (FIU) has blocked access to no fewer than 27 websites belonging to overseas crypto trading platforms.

Among the affected platforms are well-known names such as KuCoin, MEXC, Phemex, BingX and BitMart. The measure forms part of a tougher approach to foreign crypto providers that the authorities say are not properly registered.

The consequences could be considerable. The regulator warns that users may run into problems logging into their accounts, managing their holdings or even withdrawing their money.

With both technology stocks and crypto platforms under pressure, nerves in the financial markets are fraying. The big question now is whether this is a temporary correction, or the start of a far deeper cooling of the AI and crypto hype.