Global AI Frenzy Pauses, Signs of a Bursting Bubble Remain Elusive

Global hot investment in AI stocks lost some of its steam in Hong Kong and New York trading on Friday, fueling the debate about whether the current technology boom is nearing a tipping point, while Chinese mainland markets remained closed for an eight-day holiday.

Hong Kong's Hang Seng Index fell 0.5 percent on Friday but posted a 3.3 percent gain for the week. In New York, the tech-heavy Nasdaq declined 0.3 percent but ended the week up 1.3 percent. The broader S&P 500 index ended flat after a market rally fizzled.

Amazon founder Jeff Bezos told a tech conference in Italy on Friday that artificial intelligence is currently in an "industrial bubble" but the technology will bring huge benefits to society. Speaking at the same event, Goldman Sachs Chief Executive David Solomon said he expects a "drawdown" in the next year or two after technology shares have been propelled to record highs by the AI frenzy.

"You generally see a market run ahead of its potential," he said. "There are going to be winners and losers."

The benchmark Shanghai Composite Index has been a paragon of that frenzy, rising to 10-year highs in September. The index ended the third quarter with a monthly gain of 0.2 percent. The Shenzhen Component Index surged 5.4 percent in September, and the Hang Seng advanced 4.8 percent.

Signs point to continued strength in Hong Kong and Chinese mainland markets. US investment bank Morgan Stanley said Chinese stock markets in September attracted US$4.6 billion of investment from foreign funds. And Ren Shaowen, a partner of listing services at Deloitte China, said large sums of overseas capital continue to flow into Hong Kong, bolstered by policies that encourage Chinese mainland companies to seek secondary listings in the city.

Hong Kong's staying power as the go-to global market for initial public offerings was on show this week, with three successful mainland IPOs. Zijin Gold International – the world's largest IPO in the gold mining industry and Hong Kong's second-largest share sale this year, rose 68.5 percent in its debut. Smart gold watch maker Hipine surged 248 percent in its first day of trading, and Shanghai-based Pateo, a pioneer in the "Internet of Cars" industry, closed up 54 percent. All three shares gave back some gains on Friday.

Zhida Technology, the world's top seller of home electric-vehicle chargers, kicked off a Hong Kong IPO aimed at raising HK$500 million (US$64 million).

Hong Kong IPOs raised HK$47.8 billion (US$6.1 billion) in September, the second-largest monthly total this year. The city is poised to take the 2025 global crown for IPOs.

Paul Chan Mo-po, financial secretary of Hong Kong, said in a recent blog that the sentiment in Hong Kong stock market is upbeat, with the Hang Seng Index rising more than 30 percent this year.

"Hong Kong's financial market has delivered a standout performance," Chan said.

In the first three quarters of this year, Hong Kong hosted 68 IPOs, compared with 45 a year earlier, according to data from Wind. The IPOs raised an aggregate HK$182.4 billion, a surge of 228 percent that exceeded the HK$88 billion raised in 2024.

Deloitte China forecasts IPOs in the city will rise to as much as HK$280 billion this year.

"Companies in medicine, technology and retail will be bright candidates for listings," Ren said.

Elsewhere in Asia this week, Japan's Nikkei advanced, and South Korea's Kospi surged 3.16 percent, buoyed by newly announced deals between OpenAI and chipmakers Samsung and SK Hynix.