According to CNBC, shares of Asian AI-linked companies fell sharply Wednesday as investors grew wary of stretched valuations. SoftBank stock plunged 10% while chip testing equipment maker Advantest dropped over 8%. The selloff followed overnight declines in U.S. AI stocks, where Palantir fell about 8% despite topping third-quarter expectations. The broader AI theme is facing investor skepticism as valuations reach what many consider unsustainable levels. This marks one of the most significant pullbacks in the AI sector since the rally began earlier this year.
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<h2 id="ai-bubble-concerns”>The AI bubble question
Here’s the thing about AI stocks – they’ve been running so hot that even good news isn’t enough anymore. Palantir beat expectations and still got hammered. That’s a classic sign of a crowded trade where everyone’s looking for the exit at the same time. And when you see companies like SoftBank, which has massive AI investments through its Vision Fund, taking a 10% hit in a single day? That gets your attention.
Where does this go from here?
So is this the beginning of the end for the AI rally? Probably not, but it’s definitely a reality check. The market’s basically saying that even revolutionary technology needs to be priced reasonably. I think we’re seeing the transition from “buy anything AI” to “be selective about which AI companies actually have sustainable business models.” The companies with real revenue and clear paths to profitability will likely recover faster than the pure hype plays.
Bigger picture impact
Look, SoftBank isn’t just another tech company – it’s a bellwether for global tech investing. When their shares drop this dramatically, it sends ripples through the entire startup ecosystem. We’re talking about potential impacts on future funding rounds, IPO plans, and even hiring strategies across the tech sector. The question now is whether this is a healthy correction or the start of something more serious. Given how much money has flowed into AI, I’d bet on some continued volatility ahead.
