AI Capex Selloff Rattles Asian Markets
AI Capex Selloff Rattles Asian Markets
Asian equity markets opened the week on a cautious note as the AI capex selloff that battered global technology stocks throughout October continued to weigh on sentiment. Japan's Nikkei fell 0.5%, South Korea's KOSPI lost 0.8%, having already shed 16% last month, while MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4%. The mood reflects growing unease about whether the enormous build-out of artificial intelligence infrastructure can continue to justify the capital it is consuming.
October Was the Wake-Up Call
The Nasdaq Composite dropped almost 7% in October, its worst monthly performance since the Liberation Day tariff selloff of April 2025. That context matters. The AI capex selloff is not a single-day event. It is the culmination of a growing realisation that hyperscalers are spending at a pace that earnings growth alone cannot keep up with. According to Goldman Sachs analysts, capital expenditure by major cloud providers is expected to nearly double to $800 billion this year, before climbing further to $1.2 trillion in 2027. Against that backdrop, investors who had been pricing in accelerating returns are being forced to recalibrate.
S&P 500 futures edged up 0.4% on Monday morning, and Nasdaq futures bounced 0.6%, but these are modest recoveries after a severe month. Wall Street closed the week lower on Friday, and the central question heading into this week is whether earnings from Apple, AMD and Palantir can slow the retreat or accelerate it.
The broader concern is structural, not cyclical. AI infrastructure is real, the demand for it is genuine, and revenues tied to it are growing. But the growth rate is peaking, according to Goldman Sachs' own analysis, and the market does not reward slowing acceleration the same way it rewards compounding momentum. That is the core logic of the AI capex selloff, and until something in the earnings data breaks that narrative, it remains the dominant frame for trading global indices and tech-linked pairs.
Goldman Sachs Puts Numbers to the Problem
Goldman Sachs' chief US equity strategist Ben Snider captured the dilemma in a note published this week. He wrote that recent earnings results have confirmed earnings growth is strong, but it is no longer accelerating. His team sees S&P 500 EPS growth of nearly 30% in 2026, slowing to 18% next year. That deceleration narrative is precisely what has fuelled the AI capex selloff. Markets are repricing growth stocks from acceleration mode to growth-at-a-reasonable-price mode, and for many AI names the reasonable price still has room to fall.
"Earnings results have underscored the fundamental challenge facing equity investors — earnings growth is strong, but it is no longer accelerating."
Ben Snider, Chief US Equity Strategist, Goldman Sachs — November 2026
The cost of insuring against corporate defaults blew out last week as concerns over negative cash flow mounted. For traders in Asia watching indices like the Hang Seng, KOSPI and Nikkei, the concern is direct: these benchmarks are heavily tied to semiconductor supply chains, data centre infrastructure demand and the broader risk-on appetite that AI enthusiasm had been feeding. When US tech leadership wobbles, Asian indices tied to that supply chain wobble with it.
According to Reuters, gold hit a one-year low last week as stressed investors sold bullion to raise money for margin calls, a sign the AI capex selloff has moved beyond equity desks and into portfolio-wide deleveraging. That kind of forced selling pressure tends to amplify moves in correlated assets well beyond what fundamentals alone would justify.
Intel's 29% Collapse Sets a Cautious Tone
Intel's near-29% tumble on Friday was the single most visible episode of the AI capex selloff in motion. Intel has been positioned as a recovery story, a legacy chipmaker trying to claw back relevance in a world reshaping itself around Nvidia's architecture. Its results and guidance triggered a market reaction that went well beyond Intel itself. AMD fell more than 10%, and Nvidia slipped over 4%, as investors reassessed the health of the entire chip ecosystem.
Two things are worth separating here. The AI capex selloff is not a rejection of artificial intelligence. It is a rejection of the idea that unlimited AI spending translates automatically into unlimited profit for every company in the supply chain. Intel's stumble showed there are clear winners and clear losers in this infrastructure buildout, and the market is no longer willing to give every chip name the benefit of the doubt.
CoreWeave, the Nvidia-backed AI cloud company that listed earlier this year, sank 25% last week amid concerns over AI financing. A Buy upgrade from Goldman Sachs this morning has left the stock essentially flat, suggesting the market is not yet ready to chase recovery plays in the sector.
What This Week's Earnings Mean for the AI Trade
With Apple, AMD and Palantir all reporting this week, the stakes for the AI capex selloff narrative are unusually high. Apple is trading down 1.23% heading into the week. AMD's 10.88% fall last week puts it under serious pressure to reassure investors that its AI accelerator roadmap is intact and that data centre customers are still buying. Any slip in guidance will be read as confirmation that the spending slowdown is broader than Intel alone.
Palantir reports on Monday after the bell. The stock has fallen 6.27% today, suggesting traders are not waiting for the results before repositioning. Palantir's business is deeply tied to government and enterprise AI spending, which makes its results a proxy for whether real-world AI deployment is keeping pace with the capital being deployed into infrastructure. Strong results from any of these three names could help stabilise sentiment. Cautious guidance from any of them could extend the AI capex selloff into November.
Bonds, Gold and the Shifting Fed Rate Path
One direct consequence of the AI capex selloff is that sovereign bonds have caught a bid. The retreat in equities has investors wondering whether a sustained stock market decline could deter the Federal Reserve from hiking rates in December. Futures still imply a 72% chance of a quarter-point rate rise, but total tightening priced in has fallen from more than 70 basis points a month ago to just 55 basis points today.
Yields on 10-year Treasuries nudged up to 4.952% on Monday, well off their October peak of 5.3645%. Two-year yields stand at 4.612%. Friday's US payrolls report will be critical. Median forecasts call for 65,000 new jobs in October, after a disappointing 29,000 gain in September. A weak number would weaken the case for a December hike and provide potential relief to growth stocks caught in the AI capex selloff, giving traders who are long Nasdaq futures a clear catalyst to watch.
Among other central banks this week, the Reserve Bank of Australia, the Bank of England and Sweden's Riksbank are all expected to raise rates. Norway's Norges Bank is seen on hold. For forex traders, the RBA and BOE decisions will drive volatility in AUD/USD and GBP/USD pairs. The euro was flat at $1.1156 on Monday, while dollar/yen was barely changed at 157.62, reflecting broader uncertainty across currency markets as traders wait for clearer signals on the Fed's path.
Oil Pulls Back as Iran Talks Progress
Oil prices eased on Monday after a strong October. Brent crude dipped 1.5% to $111.72 a barrel, while WTI crude fell 1.7% to $102.37. This follows a 13.6% surge in October, driven by fears over the ongoing US-Israeli military campaign in Iran and its potential to disrupt oil flows through the Strait of Hormuz. According to Reuters, Iranian and Qatari officials have held a third consecutive day of talks aimed at securing a ceasefire and a phased reopening of the strait.
A sustained pullback in crude would be meaningful for inflation expectations and, by extension, for the Fed's decision calculus heading into December. High oil keeps inflation elevated and keeps the pressure on central banks to tighten. Softer crude gives policymakers more room to pause, a secondary relief valve for equity markets still under pressure from the AI capex selloff.
Gold recovered 0.6% to $3,898 an ounce on Monday, after falling 6.8% in October. Dip buyers have emerged at a technically significant level. Gold's near-term direction is caught between two forces: safe-haven demand linked to the Iran situation, and the opportunity cost of holding non-yielding metal as rates remain elevated. A de-escalation in the Middle East would reduce the geopolitical premium currently embedded in gold, even as equity volatility supports it from the other side.
Midterms and Binance Add to the Noise
Tomorrow is US midterm election day, and the results add a political dimension to the AI capex selloff that pure earnings analysis cannot fully capture. A Democratic win in either the House or Senate could complicate the regulatory environment for large-scale data centre expansion, a direct concern for hyperscalers that have announced massive build programs. Markets are attentive to this, and any outcome that signals tighter oversight of cloud infrastructure could add another layer of selling pressure to tech names still recovering from October.
From the crypto space, Binance went back online on Sunday after hackers stole billions from the platform last week. Withdrawals spiked as users moved funds following the breach. For CFD traders, the direct impact on traditional markets is limited, but the event is a reminder that risk appetite remains fragile across asset classes.
The Week Ahead: What Traders Should Watch
The AI capex selloff has brought the global technology trade to a reckoning point, and this week delivers the data needed to form a clearer picture of where things go next. The earnings from Apple, AMD and Palantir will test whether the market is pricing in too much pessimism or too little. Friday's payrolls report will shape the Fed narrative for the rest of the year. The US midterm results will determine whether AI's regulatory environment gets more complicated. And the Iran ceasefire talks will continue to influence oil, inflation expectations and sovereign bond yields across the board.
According to Reuters, Goldman Sachs data points to AI capex growth peaking even as absolute spending continues to rise. If that interpretation holds, the repricing of AI names may still have further to run. The real question for traders is not whether AI investment continues. It almost certainly will. The question is whether the market will keep paying a premium for growth that is no longer accelerating. The earnings and macro data this week go a long way toward answering it.
FAQ
Frequently asked questions
What is causing the AI capex selloff in global markets? +
The AI capex selloff is driven by concerns that capital expenditure by major cloud providers is outpacing the pace at which AI investment generates returns. Goldman Sachs analysts expect hyperscaler capex to nearly double to $800 billion in 2026 and rise further to $1.2 trillion in 2027. While earnings growth remains strong, it is no longer accelerating, prompting investors to reprice technology stocks downward.
How have Asian markets been affected by the AI capex selloff? +
Asian markets have slipped in response to the AI capex selloff. Japan's Nikkei fell 0.5%, South Korea's KOSPI lost 0.8% after shedding 16% in October, and MSCI's broadest Asia-Pacific index outside Japan eased 0.4%. Asian indices are closely tied to semiconductor and data centre supply chains that feed directly into AI infrastructure demand.
Will the Federal Reserve still hike rates in December despite the market selloff? +
Markets currently price a 72% chance of a quarter-point rate hike in December, though total tightening expectations have fallen from over 70 basis points a month ago to 55 basis points today. The outcome of Friday's US payrolls report and the broader equity market performance will largely determine whether the Fed proceeds.
Why did Intel's stock fall nearly 29% last week? +
Intel fell nearly 29% on Friday after its earnings results and guidance disappointed investors. The decline was part of the broader AI capex selloff, reflecting concerns that Intel is losing ground in the AI chip market and that legacy chipmakers may not benefit proportionally from the AI infrastructure spending boom.
What key events should traders watch this week? +
Key events this week include earnings from Apple, AMD and Palantir; US midterm elections on Tuesday; central bank rate decisions from the Reserve Bank of Australia, Bank of England and Sweden's Riksbank; the US ISM manufacturing survey on Monday; and the all-important US payrolls report on Friday.
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