Shares of Singapore-listed AEM Holdings plunged as much as 13.2% in early trading on Thursday, tracking a sharp overnight selloff in US semiconductor stocks as concerns over potential restrictions on AI data-center development rattled the global chip sector.

The selloff on Wall Street followed the US midterm elections, in which Democrats secured control of Congress and won the Texas governor's race. The results raised concerns that increased regulatory scrutiny or potential restrictions on data-center construction could slow the expansion of AI infrastructure, particularly in Texas, a major US data-center hub.

The prospect of slower data-center development weighed heavily on companies supplying the AI infrastructure ecosystem, including semiconductor and equipment makers. Micron Technology, Marvell Technology and Sandisk each lost at least 7% on Wednesday, while Nvidia and Broadcom also ended lower. The weakness came despite gains in the broader US stock market, highlighting the pressure on AI infrastructure-related stocks.

The weakness in US chip stocks spilled over into Asian markets, putting pressure on Singapore's semiconductor sector. AEM, which supplies advanced semiconductor test solutions, was among the stocks caught in the regional selloff.

Adding to the pressure, CGS International analyst William Tng lowered his target price on AEM to S$12.92 from S$14.79, citing a normalisation in valuations of AI-related stocks. However, he maintained his high-conviction "Add" recommendation, indicating that his longer-term investment view remains positive.

Tng expects AEM to report net profit of S$26 million for the third quarter of fiscal 2026, up 56.4% from the previous quarter and nearly 29 times the less than S$1 million recorded in the same period last year. AEM is scheduled to release its business update for the quarter ended September on Nov. 11.