Asian Chipmakers Rally on AI Spending Hopes as Oil Surges Past $96

The morning markets opened with a familiar rhythm: money chasing the next big thing. Across Asia, stock indices climbed on the simple belief that artificial intelligence would keep spending money flowing into the region's chipmakers. The MSCI Asia Pacific gauge rose 1%, but the real action was in Seoul, where the Kospi jumped 3.2%. Samsung Electronics and SK Hynix, the two South Korean semiconductor giants, each gained more than 3% as traders wagered these companies would capture a meaningful slice of the hundreds of billions of dollars now being poured into AI infrastructure worldwide. A broader measure of Asian semiconductor stocks was heading toward a third consecutive day of gains.

Yet the mood was not uniformly bullish. Futures tied to the Nasdaq 100 fell 0.3%, a sign that caution was creeping back in. Alphabet had just announced capital spending plans of up to $205 billion for the year—a number that shocked Wall Street by how much it exceeded prior guidance. The company is racing to build out computing capacity to meet what executives described as surging demand for AI services. But the market's reaction was mixed. Alphabet's own shares dropped more than 3% in after-hours trading. Tesla fell 4%. IBM edged lower. The message was becoming clearer: investors wanted proof that all this spending would actually pay off.

This moment marks a critical inflection point for the entire AI trade. Just a week earlier, a technology selloff had pushed a gauge of chipmakers into bear market territory. Now, with earnings season underway, the burden of proof had shifted squarely onto corporate management. Alphabet's massive capex increase was being read two ways at once—as confirmation that the AI buildout was accelerating, which was good news for suppliers in Asia, and as a warning that the company was willing to spend far more than expected to stay competitive, which raised questions about returns. Josh Gilbert, an analyst at eToro covering the Asia-Pacific region, framed it this way: the capital spending surge meant billions of dollars would flow directly into order books across Asia, and investors were interpreting that as validation that the infrastructure race was still on.

But Mark Malek, chief investment officer at Siebert Financial, captured the shift in investor psychology more sharply. The optimism about AI remained intact, he wrote, but the conversation was changing. Management teams would now face intense scrutiny not on their AI ambitions but on return on invested capital—the actual profits these massive bets would generate. Intel was set to report earnings on Thursday. Microsoft, Meta, and Amazon would follow in the coming week. Each earnings call would be parsed for clues about whether the hundreds of billions already committed were translating into real business returns.

Oil markets, meanwhile, were telling their own story about geopolitical risk. Crude rose as much as 2.5% to nearly $96.50 a barrel, the highest level since early June, after Iran-backed Houthi militants claimed they had targeted two Saudi Arabian oil tankers in the Red Sea. The threat of deeper supply disruptions sent energy prices higher and rattled bond markets. Treasury yields, which had already been climbing on inflation concerns, held their recent losses. The two-year note sat at 4.30%, up four basis points during the U.S. session. The 30-year bond yield remained above 5%, marking the longest stretch above that level since the financial crisis began. Investors were worried that higher oil prices would keep inflation sticky and force the Federal Reserve's hand.

The geopolitical backdrop was darkening. President Trump had vowed to strike Iranian bridges and power plants if Tehran continued attacking vessels in the Strait of Hormuz. Iran responded with its own warning. The escalation was no longer theoretical. Ian Lyngen at BMO Capital Markets noted that diplomatic efforts to resolve the Middle East conflict had effectively stalled while military strikes continued with no sign of easing. The rally in energy prices was weighing on the Treasury market as hostilities between the U.S. and Iran intensified.

Money markets were pricing the odds of what comes next. With the Federal Reserve meeting scheduled for the following week, traders were assigning roughly a 30% probability to a rate increase and a 70% probability that policymakers would hold rates steady. The European Central Bank would announce its own decision later that day. The dollar index edged 0.2% lower. Bitcoin fell 0.4% to $65,610. Gold slipped 0.1% to $4,124.64 an ounce. The market was waiting—for earnings, for clarity on whether AI spending would generate returns, for the Fed's next move, for word from Tehran or Washington about whether the Red Sea tensions would escalate further. For now, Asia's chipmakers were betting the money would keep flowing. Everything else was a question mark.