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SINGAPORE: Tech stocks have been swinging sharply in recent weeks, as investors weigh the promise of artificial intelligence against concerns over lofty valuations and returns on massive spending. \u00a0<\/p>\n
The volatility has rippled across global markets – from Wall Street to Seoul – with sharp sell-offs in major tech names followed by equally swift rebounds.<\/p>\n
In South Korea, for instance, stocks posted their strongest quarterly gain in nearly 30 years on Tuesday (Jun 30), powered by a rally in chipmakers – just a week after plummeting nearly 10 per cent.\u00a0<\/p>\n
Why are AI-linked stocks so volatile, and should investors be worried when markets pull back?<\/p>\n
Analysts said recent AI-fuelled sell-offs have been driven by uncertainty about the returns of massive AI investments, as well as overstretched valuations.<\/p>\n
US technology giants are expected to collectively invest about US$650 billion in AI-related infrastructure this year, according to an analysis by Bridgewater Associates. That is a sharp increase from US$410 billion in 2025.\u00a0<\/p>\n
\u201cAI stocks have been in focus and have done well due to their ability and capability to bring the new technology into the market, which will drive permanent and increased usage over the long term,\u201d RHB Singapore\u2019s research analyst Alfie Yeo told CNA.\u00a0<\/p>\n
\u201cHowever, amid higher interest rates and inflation concerns in the US, the focus in recent days has now shifted to the clarity of future returns vs initial investment \u2026 in this space.\u201d<\/p>\n
Chris Beauchamp, chief market analyst at IG, noted that as with every trend, the AI sector will also face rocky patches. \u201cThe journey has become more volatile now that the initial rush of buying has slowed,\u201d he added.<\/p>\n
The tech-heavy Nasdaq Composite – often seen as a proxy for AI-linked stocks – has reflected these swings.\u00a0<\/p>\n
It fell into correction territory earlier this year amid broader market jitters tied to uncertainties around the US-Iran war. The index plunged nearly 11 per cent in March from its last record high in October last year, before rallying 15.3 per cent in April.<\/p>\n
Such swings reflect both profit-taking and opportunistic buying.<\/p>\n
\u201cAfter their huge rally, many tech stocks face much pricier valuations, and as a result investors have become more skittish about possible weakness in earnings,\u201d Beauchamp said.<\/p>\n
\u201cHaving made such big gains of late, the temptation to book profits is becoming hard to resist.\u201d<\/p>\n
After the latest dip, investors have in turn rushed in to pick up bargains.\u00a0<\/p>\n
“After last week’s record selling in big tech, buyers returned to the same names they were throwing overboard only days earlier,” said SPI Asset Management’s Stephen Innes.<\/p>\n
“That does not mean the AI trade has suddenly been cured. It means the patient stopped bleeding long enough for the surgeons to begin bidding the stock back up.”<\/p>\n<\/div>\n
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SINGAPORE: Tech stocks have been swinging sharply in recent weeks, as investors weigh the promise of artificial intelligence against concerns over lofty valuations and returns…<\/p>\n","protected":false},"author":1,"featured_media":65440,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/dam.mediacorp.sg\/image\/upload\/s--CdhH5jb7--\/c_crop,h_450,w_800,x_0,y_0\/c_fill,g_auto,h_676,w_1200\/fl_relative,g_south_east,l_mediacorp:cna:watermark:2024-04:reuters_1,w_0.1\/f_auto,q_auto\/v1\/one-cms\/core\/2026-05-01T135448Z_2_LYNXMPEM402MF_RTROPTP_3_USA-STOCKS.JPG?itok=2Qh5g-c_","fifu_image_alt":"","footnotes":""},"categories":[2],"tags":[15,1339,3384,1645,15257,310,508,25801],"class_list":["post-65439","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buzz-news-sg-global","tag-cna","tag-explains","tag-markets","tag-seoul","tag-stocks","tag-street","tag-wall","tag-whipsawing","wpcat-2-id"],"_links":{"self":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/posts\/65439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=65439"}],"version-history":[{"count":0,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/posts\/65439\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/media\/65440"}],"wp:attachment":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=65439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=65439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=65439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}