US tech sell-off ripples to Singapore, analysts weigh buying the dip in AI stocks

A steep sell-off in US technology equities spread to Asian markets on Nov. 5-6, pulling down the Nasdaq 100 by 6.4%, the S&P 500 by 4.4% and the Philadelphia Semiconductor Index by 12.2%. The decline also hit chip-heavy exchanges in South Korea, Taiwan, Japan and Singapore-listed tech stocks.

Analysts linked the market reaction to the Democrats’ recent sweep of Congress, which could bring tighter scrutiny of AI-related projects, including electricity and water use, grid costs and permitting for data centres. They noted that crowded AI bets and leveraged positions may have amplified the drop as investors rushed to exit.

"AI demand, existing infrastructure and the technological opportunity did not disappear overnight," Saxo chief investment strategist Charu Chanana wrote in a note to investors on Nov. 6.

Chanana added that many leading technology firms still generate strong cash flows and hold competitive advantages, but market sentiment and valuation expectations have shifted. She said the sell-off reflects genuine uncertainty and amplified selling pressure rather than an immediate collapse of business fundamentals.

Invesco chief global market strategist Brian Levitt described the move as "a reset in one of the market’s strongest and most crowded trades" and warned that the correction could continue, leaving previously top-performing stocks lagging in the months ahead. He also said lower prices could make some AI stocks more attractive to long-term investors.

For investors, Chanana advised those with a long-term horizon and capacity to absorb further losses to keep regular investments if their portfolio mix remains appropriate. She suggested that investors looking to buy the dip focus on companies with solid balance sheets, steady cash flow and reasonable valuations, and consider spreading purchases over time to avoid committing all cash at a single price.

She cautioned margin traders to assess how far prices could fall before additional cash would be required, and urged near-retirees to maintain sufficient liquidity to avoid forced sales during downturns.

Wealth-advisory executive director Afdhal Rahman of OCBC highlighted that cloud giants such as Microsoft, Alphabet and Amazon are well positioned in the near term, with strong balance sheets and diversified businesses that can absorb potential delays in data-centre projects. However, reduced spending by these providers could lower orders for chipmakers and equipment makers.

Rahman expects computing-power demand to remain robust through 2027 and favours graphics processors, custom chips and networking equipment, while remaining cautious on memory stocks that may already price in expected growth. He also sees opportunities for established software firms with entrenched products and data assets, as well as cybersecurity companies that stand to benefit from new AI-driven security risks.

He warned that smaller AI-focused cloud providers reliant on debt could face higher financing costs if permitting delays extend the time before revenue generation. "While the funding tap has not been turned off, it is becoming more selective. So, too, should equity investors," he said, recommending that most investors spread AI exposure across several industry segments.