Japanese, South Korean and Taiwanese chip shares rallied after strong US earnings revived confidence in artificial-intelligence investment, while falling oil prices eased inflation concerns.
MARKET INSIDER — Asian technology stocks surged on Wednesday as strong AI-related earnings and lower oil prices propelled Wall Street to record highs, encouraging investors to return to semiconductor shares after several volatile sessions.
SoftBank Group climbed almost 14%, supported by an overnight rally in majority-owned Arm Holdings and optimism surrounding its expansion into AI data-centre processors. Advantest jumped 8.77%, SK Hynix gained 5.77% and Taiwan Semiconductor Manufacturing Co. rose 3.66%, making the rally one of the broadest advances for Asian chip stocks in recent weeks.
Key Highlights
- SoftBank surged almost 14% as investors responded to gains in Arm and renewed optimism about AI infrastructure.
- Advantest rose 8.77%, SK Hynix gained 5.77% and TSMC advanced 3.66%.
- The Nasdaq Composite jumped 2.59%, while the S&P 500 and Dow closed at record highs.
- Falling oil prices and hopes for a Strait of Hormuz agreement reduced near-term inflation and supply concerns.
SoftBank leads Japan’s technology rally
SoftBank was the standout performer in Tokyo, rising nearly 14% as investors treated the conglomerate as a leveraged proxy for the global AI investment cycle.
The company’s exposure extends from Arm’s chip architecture to data centres, computing infrastructure and private AI companies. That portfolio gives SoftBank considerable upside when expectations for artificial-intelligence spending improve, but it also makes the shares highly sensitive to changes in technology valuations.
The latest rally followed an overnight advance in Arm, whose designs are increasingly being used in cloud servers and AI systems. Arm is expanding beyond licensing intellectual property through its Arm AGI CPU, a processor designed for AI data-centre workloads.
Arm said its new platform could more than double performance per rack compared with conventional x86 processors, potentially helping data-centre operators obtain more computing capacity from limited electricity and physical space. The company has named Meta as a lead partner and co-developer., according to Arm.
The expansion could strengthen Arm’s position in data centres, where its energy-efficient architecture has already gained adoption among major cloud providers. It could also increase the value of SoftBank’s controlling stake if Arm captures higher royalty revenue and a larger share of the economics from complete processors.
However, SoftBank’s sharp rise reflects expectations as much as current earnings. Its market value can move considerably faster than the underlying performance of its portfolio companies, particularly when investors rapidly increase or reduce their exposure to AI.
Semiconductor gains spread across Asia
The rally extended across Japan’s semiconductor supply chain. Chip-testing equipment maker Advantest rose 8.77%, Tokyo Electron gained 3.26% and memory producer Kioxia advanced 4.24%.
South Korea’s SK Hynix climbed 5.77%, Samsung Electronics gained more than 2.5% and Seoul Semiconductor added 6.73%. In Taiwan, TSMC rose 3.66%.
Japan’s Nikkei 225 advanced approximately 3.5%, while South Korea’s KOSPI gained more than 4%. The broader MSCI Asia-Pacific index outside Japan rose about 2.3%, Reuters reported.
The breadth of the move reflects the central role Asian companies play in the AI supply chain. TSMC manufactures many of the world’s most advanced processors. SK Hynix and Samsung supply high-bandwidth memory and other components used in AI servers, while Advantest and Tokyo Electron provide essential testing and fabrication equipment.
These companies therefore benefit when Microsoft, Amazon, Meta and other technology groups increase expenditure on data centres. Demand for accelerators also creates secondary demand for memory, networking systems, packaging and power-management equipment.
Wall Street records revive the AI trade
Asian markets followed a powerful US session in which the S&P 500 and Dow Jones Industrial Average reached record closing highs.
The Nasdaq Composite climbed 2.59% to 26,584.99, while the S&P 500 gained approximately 1.8% and the Dow advanced nearly 1.7%. The Philadelphia Semiconductor Index rose 6.6%.
Palantir Technologies surged 29.5% after raising its annual revenue forecast, supported by accelerating demand from US government and commercial customers. The company now expects annual revenue of approximately $8.15 billion, above its previous projection, Reuters mentioned.
Caterpillar also rallied as demand for power-generation and construction equipment linked to data-centre development strengthened the argument that AI spending is benefiting companies beyond traditional software and semiconductor groups.
The results addressed one of the market’s principal concerns: whether massive capital investment in AI infrastructure is producing measurable revenue. Palantir’s accelerating commercial sales and Caterpillar’s infrastructure demand offered evidence that the spending cycle is feeding into both digital services and the physical economy.
Falling oil prices provide a second catalyst
Technology earnings were not the only driver of the rally. Oil prices dropped about 5% on Tuesday amid optimism that diplomatic talks could restore freer movement through the Strait of Hormuz.
US Treasury Secretary Scott Bessent said Washington and Tehran might reach an agreement within days. The possibility of reopening the strategic waterway reduced fears of a prolonged disruption to Middle Eastern energy exports.
Brent crude subsequently declined toward $79 a barrel, while West Texas Intermediate fell to approximately $75 in Asian trading on Wednesday, Reuters reported.
Lower crude prices are particularly supportive for Asian markets because Japan, South Korea, Taiwan, India and much of Southeast Asia depend heavily on imported energy. Falling oil reduces pressure on inflation, corporate margins, trade balances and domestic currencies.
It can also lower expectations for interest-rate increases. That matters for technology shares because their valuations depend heavily on the present value of future earnings and therefore tend to benefit when bond yields decline.
The oil-price move nevertheless remains vulnerable to diplomatic developments. Optimistic comments from US officials do not constitute a completed agreement, and any renewed disruption to shipping could quickly restore the geopolitical risk premium.
Recent volatility remains a warning
Wednesday’s rally followed sharp swings across global technology markets. South Korea’s semiconductor-heavy market has alternated between steep losses and record rebounds as investors reassess the sustainability of AI capital expenditure.
That volatility reflects a growing divide between confidence in long-term demand and concern about near-term valuations.
Spending commitments by large cloud companies provide suppliers with substantial order visibility. Yet semiconductor shares have already priced in years of growth, leaving them vulnerable if capital expenditure slows, new capacity reduces shortages or customers struggle to generate adequate returns from AI services.
SoftBank carries an additional layer of risk because its valuation depends on a collection of listed and privately held technology assets. A rising Arm share price can increase the value of SoftBank’s holdings, but the reverse is also true. Debt, holding-company discounts and changing valuations across private investments can amplify movements in either direction.
What investors should watch next
The durability of the Asian technology rally will depend on upcoming corporate earnings and guidance from semiconductor manufacturers, cloud providers and data-centre suppliers.
Investors should focus on AI-related revenue, order backlogs, pricing, capital expenditure and free cash flow. Strong demand alone may not support valuations if companies must spend faster than their earnings grow.
Memory prices will be especially important for SK Hynix and Samsung, while TSMC’s advanced-node utilization and packaging capacity will offer signals about demand for next-generation AI accelerators. For SoftBank, Arm’s data-centre revenue and progress in selling complete CPU products could become increasingly important valuation drivers.
Oil and diplomacy remain the principal macroeconomic variables. A lasting agreement that restores normal traffic through the Strait of Hormuz could extend the decline in energy prices and support Asian importers. A breakdown in negotiations would risk reversing both the oil move and part of the technology rally.
Wednesday’s gains show that investors remain willing to return quickly to AI stocks when earnings and macroeconomic conditions align. They do not, however, eliminate the market’s central concern: whether the extraordinary sums being committed to artificial intelligence will produce returns large enough to justify current valuations.
