Shares in Japan’s SoftBank Group plunged more than 14% Wednesday amid a broader drop in Asian AI-linked companies, tracking declines in U.S.peers, as investors turned wary of stretched valuations in the market’s moast crowded trade.
softbank, which has built a broad portfolio of AI-related investments spanning infrastructure, chips, and application firms, lost about $32 billion in market cap. If losses hold, the group’s shares will clock their worst day since last August when they tanked over 18%, data from LSEG showed.
SoftBank has a controlling stake in U.K-based Arm Holdings, whose chip designs power mobile and AI processors, and acquired Ampere Computing this year to strengthen it’s AI data-center capabilities. Nasdaq-listed Arm Holdings saw shares drop 4.71% overnight.The group has backed leading AI model developers such as OpenAI as well as application-level startups like OpusClip a generative-AI video-editing platform, and Tempus AI which applies machine learning to precision medicine.
SoftBank has now erased nearly $50 billion in market cap over two days. Shares had dropped over 7% on Tuesday as well.
Other Japanese tech stocks also fell: semiconductor testing equipment maker Advantest declined over 8%, chipmaker Renesas Electronics lost 5.48%, Tokyo Electron, a chip production equipment maker, fell more than 5%.south Korean memory chip giants Samsung Electronics and SK Hynix lost nearly 6%. The surge in chipmakers SK Hynix and Samsung Electron
AI Stock Concerns Rise as Valuations Echo Dot-Com Era, Triggering Sell-Off
Recent declines in tech stocks, notably within the artificial intelligence (AI) sector, are fueling concerns of a potential market correction reminiscent of the dot-com bubble of the late 1990s. The downturn follows a period of rapid growth driven by enthusiasm for AI, pushing stock valuations to levels not seen in over two decades.
The sell-off began after U.S. software company Palantir experienced an approximately 8% drop overnight, despite exceeding expectations for the third quarter. This decline highlights anxieties surrounding sky-high valuations across the AI sector.According to FactSet, the S&P 500’s forward price-to-earnings (P/E) ratio has surpassed 23 – its highest point since 2000. https://www.cnbc.com/2025/11/03/stock-market-today-live-updates.html
“There is fear of an AI correction,and if it comes,it will sweep the rest of the market wiht it due to the heavy weight of the leading names,” warned market veteran Louis Navellier in a recent note.
Analysts are increasingly pointing to similarities between current AI company valuations and those seen during the dot-com boom, where share prices surged ahead of demonstrable profitability. This concern is echoed by Jared Bernstein, former Chair of the Council of Economic Advisers under the Biden management, who noted that AI investment currently represents a significantly larger portion of the economy – almost one-third higher – than during the internet bubble, suggesting a potentially “bubbly” situation.https://www.cnbc.com/2025/10/21/are-we-in-an-ai-bubble.html
Adding to the cautious sentiment, Michael Burry, known for his accurate prediction of the 2008 financial crisis, has taken a short position against prominent AI companies. his firm, Scion Asset Management, recently disclosed notable short positions in both Palantir and Nvidia, key players in the AI and chip technology industries.
The overnight declines weren’t limited to Palantir.Other major U.S. tech companies also experienced losses: Oracle fell 4%, Advanced Micro Devices (AMD) dropped nearly 4%,while Nvidia and Amazon also saw declines. https://www.cnbc.com/quotes/ORCL/,https://www.cnbc.com/quotes/AMD/,https://www.cnbc.com/quotes/NVDA/, https://www.cnbc.com/quotes/AMZN/
Though, not all analysts share the pessimistic outlook. Dan Ives, managing director and senior equity research analyst at Wedbush, believes the sell-off is temporary.”In my view, [the selloff] is short lived. I don’t believe this is a start of a more structural sell off,” Ives stated, attributing the decline to “nervousness” and a broader “risk off” sentiment affecting crypto and other markets.