Asia Stocks Fall as Samsung Earnings Fail to Ease AI Valuation Concerns

Asian stock markets declined on Tuesday as investors questioned whether future earnings can justify lofty artificial intelligence (AI) valuations, triggering a broad selloff in semiconductor stocks despite Samsung Electronics reporting another record quarterly profit.

Market sentiment weakened after Samsung, the world's largest memory chip maker, posted record operating profit driven by strong demand for high-bandwidth memory (HBM) chips used in AI servers. However, the results failed to reassure investors worried that the rapid pace of AI infrastructure spending may not be sustainable. Samsung shares plunged more than 8%, dragging South Korea's KOSPI down nearly 7%, making it the region's worst-performing major index.

Investors are increasingly shifting their focus from current earnings to whether chipmakers can maintain record profitability if spending by major cloud providers and AI companies slows. OCBC Investment Strategy Managing Director Vasu Menon said concerns remain over whether hyperscalers can generate sufficient returns from hundreds of billions of dollars invested in AI infrastructure, raising doubts about long-term memory chip demand.

The weakness spread across Asia's semiconductor sector. SK Hynix dropped more than 8% after launching the marketing process for its planned U.S. listing. Japan's Nikkei 225 fell 1.6%, while TOPIX also declined. Taiwan's Foxconn slipped despite reporting stronger-than-expected quarterly revenue, while MediaTek and Japan's Murata Manufacturing also posted notable losses. The broader MSCI Asia Pacific Index fell more than 1%.

Elsewhere, regional markets were relatively resilient. Oil prices edged higher after reports that Iran fired missiles toward commercial vessels transiting the Strait of Hormuz, although expectations of increased OPEC+ output limited gains.

Chinese stocks also retreated, with the CSI 300 and Shanghai Composite both falling around 1%, while Hong Kong's Hang Seng eased. India's Nifty 50 traded little changed, Indonesia's Jakarta Composite gained modestly, Singapore's STI advanced, and Australia's ASX 200 and Malaysia's KLCI posted slight losses.

Investors are now turning their attention to key economic events across Asia, including inflation data from the Philippines, Taiwan, and China, as well as Bank Negara Malaysia's policy meeting and the Reserve Bank of New Zealand's interest rate decision. Markets will also closely monitor the Federal Reserve's latest meeting minutes and the start of the U.S. earnings season for fresh clues on interest rates and whether the AI investment boom continues to support corporate earnings.