AI Funding Fears Send Tech Selloff into Asia

Japan’s Nikkei 225 fell 1.3%, and South Korea’s KOSPI lost 1.7% in early trading on Friday, October 23. Memory-chip maker SK Hynix declined 2.5% as pressure spread through markets exposed to AI investment.

On Thursday, the Nasdaq Composite fell 2.6%, and the Philadelphia Semiconductor Index dropped 6.7%. Meta shares lost 7%, bringing the relationship between heavy spending, cash flow, and future returns back into focus.

Meta’s Cash Flow Brings Funding into Focus

Meta’s third-quarter results illustrated the scale of the investment. The company expects 2026 capital expenditure of $135–145 billion, including principal payments on finance leases, as it expands infrastructure and AI capabilities.

Quarterly capital expenditure of $34.91 billion exceeded operating cash flow of $32.79 billion, leaving negative free cash flow of $2.12 billion. Meta still held $82.45 billion in cash and marketable securities as of September 30.

That gap focuses attention on how future investment will be funded. Using cash reserves, issuing debt, or selling shares carries different consequences for interest costs, financial flexibility, and existing shareholders.

Lower Yields Offer Only Partial Relief

Investors also moved into U.S. government bonds. The benchmark 10-year Treasury yield fell more than 19 basis points overnight before steadying around 4.96% in early Friday trading.

Treasury yields form only part of corporate borrowing costs. Investors also demand compensation for a borrower’s credit risk, which can rise if confidence weakens. Falling government yields may therefore provide uneven relief across AI-related companies.

For Asian chipmakers and equipment suppliers, the funding question matters through their customers. If major buyers postpone projects or reduce investment, future orders could weaken even while adoption of AI services continues to expand.

What Could Stabilize AI Stocks?

Further earnings reports will be assessed for evidence that investment is producing stronger revenue, margins, and cash flow. The timing of those returns matters when large infrastructure payments arrive before projects generate meaningful income.

Clearer spending commitments, credible funding plans, and improving cash generation could help rebuild confidence. Evidence that customers can finance their projects would also support suppliers whose valuations depend on continued expansion.

Conversely, more expensive debt, delayed fundraising, or weaker demand could deepen pressure on the sector. Investors may lower both their earnings forecasts and the valuation they are willing to place on those profits.

For traders, the breadth of any recovery will matter. A rebound across chipmakers, equipment suppliers, and major technology platforms would offer stronger evidence of stabilization if it coincides with greater clarity about funding and future cash returns.

Warning! This material is not intended as investment advice. Past performance data does not guarantee future returns. Investing in foreign currencies may affect your returns due to their fluctuations. Any transaction in securities may result in both profits and losses. The assumptions and expectations set forth in this material are only estimates that may not be accurate and may change depending on current economic conditions. These statements do not guarantee future returns.