Asian equities delivered a mixed performance Tuesday after Wall Street endured heavy selling tied to artificial intelligence disruption fears and renewed tariff escalation from President Donald Trump. While select chip-related markets in Asia rebounded sharply, broader sentiment remains fragile as investors weigh structural AI risks, trade uncertainty, and upcoming U.S. catalysts including Nvidia’s earnings and Trump’s State of the Union address.

Asia Diverges as Chip Stocks Rebound

Japan’s Nikkei 225 surged 0.9% to 57,354.14, supported by strength in semiconductor-linked names. Advantest jumped 4.6% and Disco Corp. gained 2.2%, reflecting continued investor confidence in hardware suppliers despite turbulence in U.S. software stocks. South Korea’s Kospi climbed 1.8% to a record 5,951.90, with Samsung Electronics rising 3.2% and SK Hynix advancing 4.8%.

Mainland Chinese markets gained more than 1% after reopening from a weeklong holiday, with the Shanghai Composite rising 1.2% to 4,129.78. However, Hong Kong’s Hang Seng slipped 1.9% to 26,564.01 as traders locked in profits following recent gains.

Australia’s S&P/ASX 200 edged down 0.1%, India’s Sensex fell 0.3%, and Taiwan’s Taiex outperformed with a 2.4% rise. The regional divergence highlights a shift toward hardware resilience even as AI disruption fears weigh on software-heavy segments.

Wall Street Hit by AI “Loser” Rotation

The cautious tone follows a sharp U.S. selloff. The S&P 500 fell 1% to 6,837.75 after Trump announced temporary 15% tariffs following a Supreme Court ruling that invalidated earlier reciprocal duties. The Dow dropped 1.7% to 48,804.06, and the Nasdaq lost 1.1% to 22,627.27.

AI-related volatility amplified losses. Cybersecurity firm CrowdStrike plunged 9.8%, extending its year-to-date decline to over 25%, after new AI-driven coding tools raised concerns about competitive pressure. AppLovin fell 9.1%, deepening a 43.5% annual slide as investors reassessed software business durability in an AI-accelerated environment.

The market is increasingly distinguishing between AI infrastructure winners and potential AI disruption casualties. Semiconductor suppliers have largely held up, while software, fintech, and service-oriented platforms face valuation compression.

Airline stocks also declined sharply amid severe weather disruptions in the U.S. Northeast. Meanwhile, Novo Nordisk shares trading in the U.S. dropped 16.4% after trial results disappointed investors, while Eli Lilly gained 4.9% on relative competitive strength.

Macro Risks, Oil Gains and Rate Uncertainty

Oil prices climbed amid geopolitical tension linked to potential U.S.-Iran developments. U.S. crude rose to $66.88 per barrel, while Brent advanced to $71.70. Currency markets reflected caution, with the dollar strengthening to 155.16 yen and the euro easing slightly to $1.1775.

Federal Reserve Governor Christopher Waller signaled that a March rate decision remains a “coin flip,” underscoring policy uncertainty. Lower rates could stimulate growth but risk reigniting inflation pressures — a delicate balance amid tariff volatility.

Bitcoin fell 2.4% to $63,330, reinforcing broader risk aversion in speculative assets.

Looking ahead, Nvidia’s earnings will serve as a pivotal sentiment gauge for the AI trade. Investors are increasingly questioning whether hyperscalers’ aggressive capital spending on AI chips can translate into sustainable profitability. Combined with trade policy uncertainty, the near-term environment suggests continued cross-asset volatility and sector rotation rather than a clear directional trend.