Asian stocks were mostly lower as the region's biggest beneficiaries of the global artificial intelligence boom lost ground on concerns over the sustainability of spending in AI infrastructure.
The losses followed Wall Street's weakness overnight as most AI infrastructure stocks were weighed by a report that Meta is building out a new cloud business that will sell excess computing power to outside customers.
Meta's reported move posed a question for Asia's AI infrastructure builders: "What if hyperscalers are building more compute than they can use profitably?" Saxo Markets Chief Investment Strategist Charu Chanana said.
The fortunes of Asia's semiconductor companies are closely tied to the Big Tech's AI spending, and any sign of slowing investment could hurt investor sentiment.
"Hyperscalers may now be preparing for a world where they have to monetise excess capacity rather than just keep building at any price," Chanana added.
South Korea's Kopsi fell 2.6% on Thursday as chip giants Samsung Electronics and SK Hynix declined 4.85% and 5.9%, respectively. Japan's Nikkei Stock Average was 1.05% lower as Kioxia Holdings tumbled 10% and Tokyo Electron dropped 4.15%.
Hong Kong's Hang Seng Index was up 1.0% as investors returned from their holiday on Wednesday. Heavyweight Chinese internet stocks, including Tencent and Alibaba, led the gainers, reversing some of their recent weakness.
While equity markets were weighed by renewed AI jitters, oil prices continued to fall as traffic through the Strait of Hormuz recovered, prompting several banks to cut their oil price forecasts.
"Expectations of normalized flows quickly pushed crude prices back to pre-conflict levels, reviving the oversupply narrative," OCBC strategists said.
OCBC lowered its Brent oil forecasts to $75 per barrel from $85 a barrel for the third quarter 2026 while UBS now expects Brent crude to average $84 a barrel this year, down $9 a barrel from its earlier forecast.
Front-month WTI crude oil futures were 1.2% lower at $67.80 a barrel, while Brent crude oil futures were down 1.0% at $70.86 a barrel.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
July 01, 2026 23:19 ET (03:19 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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