Asia bets big on AI hardware as US software stocks falter

Nippon Steel Corp. is issuing 550 billion yen ($3.5 billion) in convertible bonds internationally to manage debt incurred from its acquisition of United States Steel Corp. This move aims to repay a bridging loan of approximately 2 trillion yen, which matures in June. The company is focusing this bond sale on European and Asian markets, excluding the US.

The global landscape of artificial intelligence investment is shifting, with Asia emerging as a key beneficiary. The region's concentration of advanced chip manufacturers, semiconductor foundries, and AI-related stocks, particularly in China, is attracting investors. This contrasts sharply with the turmoil affecting parts of the US market, especially software companies.

Experts highlight that AI advancements are driving demand for hardware such as semiconductors and data centers. Companies like Taiwan Semiconductor Manufacturing Co., Samsung Electronics, and SK Hynix are seen as direct beneficiaries of increased AI spending. This has led to a divergence in market performance, with Asian tech indices reaching record highs while US software stocks have faced declines.

This shift represents a rotation from AI pioneers facing high spending to hardware producers with stronger pricing power, predominantly located in Asia. While some traditional tech service providers in India have seen declines, the overall outlook for Asian stocks remains positive due to their positioning in the AI ecosystem, attractive valuations, and robust earnings growth.