OpenAI, the U.S.-based developer of ChatGPT, recently reduced the prices of two of its latest low- and mid-tier AI models, sparking a sharp decline in Asian stock markets amid a broader tech selloff.
As of 1:02 p.m. Beijing time today, the Seoul stock index was down 1.2%, following a 5.1% drop yesterday. Meanwhile, the Shanghai Star 50 Index rebounded by 3.4% today after falling 5.1% yesterday. In Tokyo, the Nikkei 225 declined 0.3%, adding to the 0.9% decrease from the previous day.
On July 30, the company announced a 20% reduction in the price of GPT-5.6 Terra to $2 per million input tokens and $12 per million output tokens, and an 80% cut for GPT-5.6 Luna to 20 cents and $1.20 respectively. This move raised investor concerns about shifting supply and demand dynamics within the AI supply chain.
The price reductions primarily aim to improve efficiency, offset rising costs, and compete with open-source models, explained Wen Tianna, CEO of Boda Capital International. However, these cuts may lead to short-term worries about decreasing inference costs and slower growth in computing power demand, which could negatively impact sentiment toward AI hardware and semiconductor stocks.
Despite this, lower prices could eventually encourage greater usage and broader adoption, particularly benefiting software and cloud service providers. The decline in South Korean stocks was partly driven by forced deleveraging, rather than solely by the AI company’s price cuts, while Chinese tech stocks’ decline was more related to weak global sentiment toward hardware.
This price reduction has increased valuation fluctuations across global AI assets, according to Pan Jun, an investment manager at Cheese Fund. It has shifted investor focus from expanding compute capacity to assessing returns on AI investments and monetizing AI applications.
The downturn in South Korean equities also reflects a mismatch between memory chipmakers’ earnings expectations and actual results, alongside a correction of crowded, leveraged trades, Pan added. However, he emphasized that these developments do not pose a systemic risk globally.
The price cuts are prompting investors to reassess the long-term profitability of AI computing and modeling layers, important factors that fueled sector investment over the past two years, noted Mo Xiaocheng, CEO of Huanrui Fund. He added that the recent market volatility is a natural correction following a previous rally, and that the sector will face heightened competition and falling prices over time.
According to Li Zeming, CIO at Blue Water Capital Management, the ongoing price war among leading language models will slow down the commercialization of downstream AI applications and reduce investment enthusiasm. A decline in infrastructure spending will impact sectors such as semiconductors, memory chips, power equipment, and optical communication.
When hardware stocks weaken, capital often shifts toward application-layer companies with lower valuations and stronger fundamentals. Wen highlighted that internet firms listed in Hong Kong remain undervalued historically and could show resilience during the hardware correction.
Shares of a major Chinese tech company rose 0.7% today to HKD126.10 ($16.08) after closing up 7% yesterday, following the launch of a new AI product. Meanwhile, another company declined 0.9% after a 3.2% rise yesterday.