According to CNBC, shares of Asian AI-linked companies fell sharply on Wednesday as investors grew wary of stretched valuations. SoftBank dropped a whopping 10% while Advantest declined over 8% in the selloff. The declines tracked overnight losses in U.S. peers, with Palantir falling about 8% despite beating third-quarter expectations. The broader AI theme is facing serious valuation concerns as what were once market darlings now look overpriced to nervous investors.
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<h2 id="ai-bubble-jitters”>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 actually beat expectations, but investors looked past the numbers and focused on the insane valuation. Basically, we’re seeing the classic “buy the rumor, sell the news” pattern playing out across the entire AI sector. And when a company can report solid results and still get hammered, that tells you sentiment is shifting dramatically.
Why SoftBank Got Hit So Hard
SoftBank’s 10% plunge is particularly interesting because they’re not just an AI play – they’re the ultimate AI enabler through their massive Vision Fund investments. When the market gets nervous about AI valuations, SoftBank gets hit twice: once for their own stock, and again for their portfolio companies. Remember, this is the same SoftBank that’s been pouring billions into AI startups through Vision Fund. If those investments start looking overvalued, the whole house of cards gets shaky.
Where Does AI Go From Here?
So is this the beginning of the end for the AI boom? Probably not, but it might be the end of the “everything AI goes up” phase. We’re likely entering a period where investors will actually start discriminating between companies with real AI revenue and those just slapping “AI” on their PowerPoints. The companies that can demonstrate actual, sustainable AI business models will survive this shakeout. But the ones riding the hype wave? They could be in for a rough ride.
The Bigger Picture
Look, this isn’t just about a few stocks having a bad day. When market leaders like SoftBank and Palantir get hit this hard, it sends a message across the entire tech sector. We’re seeing a classic valuation reset where investors are suddenly asking “wait, are these companies actually worth these prices?” And when that question starts getting asked, the answer isn’t always pretty. The days of easy money in AI might be coming to an end, and that could mean some painful adjustments ahead for the entire sector.
