The AI Valuation Correction: A Strategic Buying Opportunity in Asia-Pacific Tech Stocks?

The AI-driven selloff in 2025 has reshaped the valuation landscape for tech stocks in Hong Kong and South Korea, sparking debates about whether the correction signals a buying opportunity or a deeper market overcorrection. With South Korea's KOSPI index plummeting 16% in November 2025 and Hong Kong's Hang Seng Tech Index showing signs of recovery, investors are grappling with the sustainability of these moves. This analysis examines the depth of the selloff, valuation metrics, and analyst sentiment to determine whether the current dislocation in Asia-Pacific tech stocks offers a strategic entry point.

The Selloff: A Global Phenomenon with Local Nuances

The selloff in AI-related stocks began as a global event, with U.S. indices like the Nasdaq dropping 1.8% amid fears of an overinflated AI bubble. South Korea, however, bore the brunt of the correction. The KOSPI fell nearly 16% in November 2025, reversing gains from a 24% surge in October according to JPMorgan. This volatility was driven by a combination of factors: foreign investors withdrew $9.13 billion from Korean markets in November, and major tech firms like Samsung Electronics and SK Hynix saw declines of 3.49% and 3.85%, respectively according to MK.co.kr. Meanwhile, Hong Kong's market fared better, with the Hang Seng Tech Index stabilizing after a sharp October decline due to geopolitical tensions according to ITiger.

The divergence between the two markets highlights differing investor perceptions. South Korea's tech sector, heavily reliant on global demand for semiconductors and AI infrastructure, faced sharper corrections as investors questioned the sustainability of high valuations. In contrast, Hong Kong's market, though volatile, showed resilience due to its exposure to China's 15th Five-Year Plan and a rebound in IPO activity.

Valuation Metrics: A Mixed Picture

Valuation metrics reveal a nuanced picture of the correction. South Korea's SK Hynix, a key player in AI memory chips, trades at a forward P/E ratio of 11.0x, significantly below the global semiconductor industry average of 16.6x. Analysts at Simply Wall St argue this represents a discount of 56.8% from its intrinsic value, calculated via discounted cash flow analysis. Samsung Electronics, with a P/E of 20.2x and a P/B ratio of 1.33, appears more balanced, reflecting cautious optimism about its AI-driven growth according to MarketCap.

In Hong Kong, Alibaba Group's P/E ratio of 17.2x is well below its proprietary fair ratio of 27.5x, suggesting undervaluation. A DCF analysis estimates its intrinsic value at $260.97 per share, implying a 38.4% discount to its current price according to Yahoo Finance. Conversely, Baidu's P/E of 34.3x-nearly double the industry average-raises concerns about overvaluation, despite its AI cloud revenue growing 50% year-on-year according to Investing.com.

Analyst Sentiment: Optimism vs. Caution

Analyst ratings for key players in the region are split. KB Securities remains bullish on South Korea's chipmakers, forecasting a combined operating profit of KRW178 trillion for Samsung and SK Hynix in 2026 due to rising demand for HBM3E and HBM4 chips. However, Morningstar analyst Jing Jie Yu has issued a lone "sell" rating for both firms, warning that even minor setbacks could trigger sharp declines given their inflated expectations.

In Hong Kong, the outlook is similarly mixed. JPMorgan upgraded Baidu to a $188 price target, citing its AI-driven revenue growth and strategic spin-off of its Kunlunxin chip unit. Alibaba, meanwhile, received a "Buy" rating with a $183 target, reflecting confidence in its cloud and AI investments according to The Globe and Mail. Yet, concerns persist about China's macroeconomic environment, with Baidu's shares slipping 3% in U.S. trading amid fears of regulatory tightening.

Strategic Buying Opportunity?

The current correction in Asia-Pacific tech stocks presents a complex calculus for investors. On one hand, valuations for companies like SK Hynix and Alibaba appear attractive relative to their intrinsic values and industry averages. On the other, the selloff reflects legitimate concerns about the sustainability of AI-driven growth and the risk of a broader market overcorrection.

South Korea's government has signaled long-term support for AI and semiconductors, with a planned KRW30 trillion investment in 2025 according to SparkCO. This, combined with resilient export demand for semiconductors and a U.S. trade deal, suggests the sector's fundamentals remain strong. In Hong Kong, the rebound in IPO activity and policy tailwinds from China's five-year plan could further stabilize the market according to EY.

However, investors must remain cautious. The selloff has been driven by a rotation into cyclical sectors, and global macroeconomic uncertainties-such as interest rate hikes and geopolitical tensions-could prolong the correction. For those with a long-term horizon, the current dislocation may offer entry points into undervalued AI leaders, but only if they are prepared to weather near-term volatility.

Conclusion

The AI valuation correction in Hong Kong and South Korea is a double-edged sword. While valuations for key players like SK Hynix and Alibaba appear compelling, the sustainability of the selloff depends on macroeconomic and regulatory factors. For investors willing to navigate the risks, the current environment may present a strategic opportunity to position for the AI supercycle-provided they align their investments with companies demonstrating strong fundamentals and long-term growth potential.