On Tuesday, markets across the Asia-Pacific region experienced a downturn, echoing Wall Street’s recent tech sector slump driven by concerns over a potential AI bubble.

Nvidia’s stock saw a decline of over 1% on Monday in the United States, erasing some of the more than 5% gains it had achieved the previous week. Other tech giants such as Palantir Technologies, Meta Platforms, and Oracle also faced setbacks.

In Japan, the Nikkei 225 index fell by 0.37% landing at 50,339.48, while the Topix index dropped 0.51%, closing at 3,408.97.

Shares in Softbank Group Corp dipped nearly 2% following the company’s announcement late Monday of its $4 billion acquisition of data center investment firm DigitalBridge. This move is part of Softbank’s broader strategy to enhance its focus on artificial intelligence.

SoftBank CEO and Chairman Masayoshi Son said the acquisition “will strengthen the foundation for next-generation AI data centers” and advance the firm’s vision to become a leading “Artificial Super Intelligence” platform provider. Shares of DigitalBridge jumped about 10% after the announcement.

South Korea’s Kospi shed 0.15% and closed at 4,214.17, while the small-cap Kosdaq declined 0.76% to 925.47, leading losses in Asia.

Hong Kong’s Hang Seng index bucked the trend and rose 0.86% in the final hour of trade, while the CSI 300 in mainland China was 0.26% higher and ended at 4,651.28.

Investors are assessing China’s military exercises around Taiwan, after the world’s second-largest economy announced new drills surrounding the island Monday.

Taiwan’s President Lai Ching-te said that Taiwan will “act responsibly and not escalate conflict,” but also said that the “frequent escalation of military pressure” by China was not something a responsible power should do.

The Taiwan Weighted Index fell 0.36% and finished at 28,707.13, with major tech names like Taiwan Semiconductor Manufacturing Company and Hon Hai falling about 0.65% and 1.3% respectively.

Australia’s S&P/ASX 200 fell 0.1% to 8,717.1, after registering gains earlier in the day.

U.S. futures were little changed in early Asian hours.

Overnight in the U.S., the S&P 500 dropped 0.35%, while the Nasdaq Composite shed 0.50%. The Dow Jones Industrial Average pulled back by 0.51%.

Traders will be looking for home price data due Tuesday stateside at 9 a.m. ET, and the Federal Reserve’s December meeting minutes at 2 p.m. ET.

—CNBC’s Sean Conlon and Fred Imbert contributed to this report.