Asian stock markets traded mostly lower Friday, mirroring steep losses on Wall Street as investors reassessed the sustainability of the artificial intelligence-driven rally that has powered global equities for much of the past two years. The shift in sentiment underscores growing unease over whether massive AI-related capital expenditures will ultimately justify lofty valuations.

Tokyo’s Nikkei 225 fell 0.8% to 57,165.13 after briefly surpassing the 58,000 mark a day earlier — a psychological milestone that now appears vulnerable. Notably, shares of SoftBank Group slid 6.8% despite reporting a quarterly profit supported by gains from its OpenAI investment. The reaction suggests that investors are increasingly focused less on headline earnings and more on forward-looking risk exposure to AI volatility.

Regional Divergence Reflects Sector Sensitivity

Elsewhere in Asia, performance diverged along sector lines. South Korea’s Kospi gained 0.4%, buoyed by strength in technology shares including Samsung Electronics, which rose 1.2%. However, Hong Kong’s Hang Seng dropped 1.8%, while mainland China’s Shanghai Composite fell 0.7%. Australia’s S&P/ASX 200 retreated 1.4%, reflecting broader risk aversion.

The weakness follows sharp declines in U.S. markets, where the S&P 500 fell 1.6%, marking its second-worst day since Thanksgiving. The Nasdaq Composite slid 2%, with technology stocks bearing the brunt of the pressure. Cisco Systems plunged 12.3% despite beating earnings expectations, while AppLovin collapsed nearly 20%, signaling that strong quarterly results are no longer sufficient to offset structural AI-related uncertainty.

Investors appear increasingly concerned about business models potentially disrupted by AI automation. The selloff extends beyond traditional software companies, raising broader questions about labor displacement, profit margins and competitive dynamics across industries.

Macro Risks and Inflation Data in Focus

Beyond AI-specific anxieties, markets are also bracing for U.S. inflation data that could recalibrate expectations for Federal Reserve policy. Economists anticipate limited scope for near-term rate cuts, particularly after recent employment data suggested labor market resilience. For investors in both the U.S. and Israel — where monetary policy decisions are closely tied to global capital flows — any shift in U.S. rate expectations carries implications for currency stability and equity valuations.

Safe-haven assets saw modest gains. Gold rose nearly 1% to $4,995.80 an ounce, recovering after briefly dipping below the $5,000 threshold earlier in the week. Silver gained 1.4%, reflecting continued volatility in metals markets. Oil prices edged lower, with U.S. crude trading near $62.77 per barrel.

Currency markets showed limited movement, with the dollar strengthening slightly against the yen to 152.89. The euro eased marginally to $1.1867.

While some analysts maintain confidence in the broader AI investment cycle, arguing that technology leadership remains intact, recent price action highlights the fragility of sentiment. Markets that have priced in aggressive growth expectations may now be entering a phase of recalibration.

Looking ahead, the trajectory of inflation, earnings quality and AI monetization will likely determine whether this pullback proves to be a temporary correction or the beginning of a broader rotation away from technology leadership. Investors would be wise to monitor volatility indicators and sector dispersion closely as markets digest both structural disruption risks and macroeconomic signals.