Asia’s Busiest Earnings Week Puts AI Boom in Focus After Selloff

Asia’s busiest earnings week will put the AI trade to a major test as investors look for proof that billions in investment are translating into profits, and that growth is spreading beyond tech.

About 550 of the roughly 1,200 companies in the MSCI Asia Pacific Index are due to report this week, according to data compiled by Bloomberg. That includes some of the biggest names in the AI boom, such as Korean memory giants SK Hynix Inc. and Samsung Electronics Co., Japanese chip firms Advantest Corp. and Tokyo Electron Ltd., and Chinese suppliers like Eoptolink Technology Inc.

Confidence in the AI trade has taken a hit in recent weeks, sending the regional benchmark down more than 6% this month and reviving a question investors have wrestled with all year: whether earnings justify the enormous sums being spent on it. The recent chip rout also pushed investors toward bonds, raising the stakes for spending to deliver returns and keep equities attractive.

If the AI trade keeps losing momentum, investors will need to look elsewhere for growth, turning attention to consumer demand and other parts of the economy.

In China, earnings from BYD Co., Air China Ltd. and Kweichow Moutai Co. will test whether the country’s weak consumer can offer any support as growth remains heavily reliant on exports.