Major Asian equity markets closed lower on Thursday as results from leading technology companies failed to restore investor confidence in the artificial intelligence sector. Elevated energy prices are also weighing on one of China’s key indices, which is approaching bear market territory, defined as a decline of 20% from its most recent peak.

The MSCI Asia Pacific index, the regional benchmark, fell 1.74%, while South Korea’s Kospi led losses with a decline of 3.41%, hitting its lowest level since April. The Kospi is widely regarded as a barometer for AI investment, given the significant weighting of SK Hynix and Samsung Electronics — two of the sector’s largest players — in its composition.

In China, the CSI 300 dropped 1.83%, edging closer to a 20% decline from its most recent peak reached in June. Hong Kong’s Hang Seng, which carries heavy exposure to the technology sector, fell more than 3% to its lowest level in nearly four months. The Shanghai Composite also closed in negative territory, ending the session down approximately 1.3%.

Earnings from Tesla and Meta, the parent company of Facebook and Instagram, fell short of convincing investors that substantial AI investments will generate meaningful returns in the near term. Shares in the company led by Elon Musk fell more than 3% in pre-market trading, despite the electric vehicle maker reporting profits above expectations and trimming its spending forecasts.

Meta, by contrast, advanced more than 2% in pre-market trading after the social media group reported profits that more than tripled, reaching €9.86 billion. However, the company signalled it would increase AI investment further, projecting capital expenditure of between $135 billion and $145 billion for the year — raising the lower end of its previous guidance of $130 billion. The scale of planned outlays is generating unease among investors.

“The market is hard to please when it comes to capital expenditure right now,” said Tim Waterer, chief market analyst at KCM Trade, as quoted by Bloomberg. “The market gets unsettled when companies raise spending and gets unsettled when they cut it, as we have just seen with Tesla. In this environment, it is almost impossible to strike the right balance,” he added.