The MSCI Asia Pacific Index fell as much as 2.2%, the most since the Aug. 5 panic selloff. Taiwan’s Taiex tumbled as much as 5.3% while Japan’s Topix slid 3.4% and Korea’s Kospi dropped 3%. The declines came after leading global AI chipmaker Nvidia Corp. shed a daily record of $278.9 billion in market value Tuesday.

The latest concerns were sparked by analyst comments that AI stocks had gotten too far ahead of what the technology can actually deliver in terms of profits. The risk-off mood was further stoked by worry over the U.S. economy after a closely watched U.S. manufacturing gauge missed estimates.

“Now investors are starting to question if the return on investment is coming through,” Randy Abrams, head of Taiwan research at UBS Global Asset Management, said in a Bloomberg TV interview. “They are a bit nervous as some of the macro data is not as strong.”

Despite rising volatility, most investors cautioned against taking Wednesday’s slide as the start of another market meltdown, recommending dip-buying of selected names, as AI spending is expected to remain strong. 

“It feels a bit like a storm in a tea cup after August,” said Andrew Jackson, a strategist at Ortus Advisors Pte. “It feels like we are not getting a repeat of the intense panic selling like last time.” 

Chip stocks were the biggest drags on MSCI’s broadest Asian equity gauge Wednesday. Among key Nvidia suppliers, foundry Taiwan Semiconductor Manufacturing Co. slid as much as 5.5%. Japanese testing-equipment maker Advantest Corp. plunged as much as 10%, while Korean memory maker SK Hynix Inc. tumbled 9.2%.

More broadly, investors are monitoring conflicting cues to kick off September, a historically volatile month for stocks. While China’s economic funk continues to weigh on sentiment, there are also expectations that the Federal Reserve will begin cutting interest rates in its upcoming meeting, providing a boost for equities.

Some also maintain optimism on the promise of AI, with companies around the world still planning to spend billions as they incorporate the new technology.

“The concern for a peak in demand for AI is exaggerated in our view,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global Pte. “We will likely see demand for AI and its supporting infrastructure remaining robust through the first half of next year.”

In addition, valuations are seen as somewhat less of an issue in Asia, where AI stocks have lagged the gains in some of the biggest global names. A Bloomberg gauge of Asian chipmakers is trading at about 13 times forward estimated earnings, down from over 18 times earlier this year and trailing the nearly 24 times level of an index of major U.S.-listed peers.