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- South Korea's Kospi sank 4% as Samsung and SK Hynix extended the AI-stock selloff.
- AI cloud firm Elice crashed 32% in its market debut, despite frenzied demand for its IPO.
- The rout is another warning that investors are reassessing the AI trade's sky-high valuations.
South Korea's AI-stock rout deepened Tuesday as Elice, a cloud-infrastructure company, crashed 32% in its market debut.
The benchmark Kospi index closed 4% lower, despite a rebound in Wall Street tech stocks on Monday. Index heavyweights Samsung Electronics and SK Hynix fell 3% and 4%, respectively.
South Korean chipmakers are major suppliers of memory used in AI systems, making their shares a closely watched gauge of the global AI boom.
The Kospi's latest selloff marks another blow for a market that has swung from boom to a nearly 40% bust in just four months.
The turmoil has also hit companies hoping to capitalize on the AI boom.
Elice, a South Korean company that rents out computing power for AI workloads, closed at 61,500 won on the Kosdaq, far below its IPO price of 90,500 won. The company raised about 201 billion won, or $151 million, in the Kosdaq's largest IPO this year.
The company's disastrous debut came despite overwhelming demand, with institutional and retail subscriptions topping available shares by roughly 400 times.
But Elice's IPO valued it far more richly than similar AI cloud companies, whose shares had already lost 20% to 60% over the preceding month, Tan wrote.
Similar concerns are rippling through AI infrastructure markets well beyond South Korea.
US-listed CoreWeave, which rents AI computing power, saw its shares and bonds tumble last week amid concern about its debt-fueled expansion. Nvidia-backed Firmus, meanwhile, withdrew its planned $5 billion Australian IPO, citing volatile market conditions.
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