MSCI’s broadest index of Asia-Pacific shares outside Japan was down more than ⁠2.45%

Asian stocks dipped on Wednesday, extending a selloff as anxiety about AI ​valuations and whether the massive spending will deliver returns rattled investors.

Oil prices climbed after latest attacks in the Middle East shattered the relative calm of recent days in Iran-U.S. war as investors fret about the impact of depleting supplies on prices and international rates.

Asian chipmakers have been at the epicentre of this year’s AI-driven rally and, more recently, investor concerns about its staying power, sparking sharp market swings.

KOSPI, which had more than tripled over 12 ​months to June, dived over 11% to its lowest level since early April, after declining more than 10% on Tuesday.

That left MSCI’s broadest index of Asia-Pacific shares outside Japan down more than ⁠2.45% after dropping 3.6% on Tuesday.

Shares of SK Hynix declined 9% as investors digested earnings that showed the chipmaker increased quarterly operating profit more than sixfold but missed lofty ​expectations.

SK Hynix delivered strong results, but in today’s AI market, strong is no longer enough, said Gary Tan, portfolio manager at Allspring Global Investments.

Investors were looking for additional catalysts, particularly ​around long-term agreements and shareholder returns, to support a memory sector that has become the epicentre of the AI trade, Tan added.

Earnings from technology companies later in the day will be a key test of the AI trade.

This round of earnings would need to prove that the huge ​capital expenditure has paid off else we may see the market drag further, said Sean Teo, sales trader at Saxo in Singapore.

Teo also said investors are now getting wary ​of circular financing where a handful of companies are investing into each other in somewhat of a closed loop where organic demand becomes unclear.

Hang Seng index bucked the trend and was up 1.4%.