Widespread selloff hits AI-linked stocks from Tokyo to Seoul as fears of an overvalued tech bubble rattle investors.
TOKYO — The global artificial intelligence (AI) rally hit turbulence on Wednesday, as shares of major Asian tech and semiconductor companies plunged amid growing concern that valuations across the sector have surged too far, too fast.
Leading the decline was SoftBank Group (9984.T), the Japanese conglomerate and one of the world’s biggest AI investors, whose shares plunged 13%, their sharpest single-day drop in more than a year. Semiconductor testing firm Advantest fell over 8%, Renesas Electronics dropped 5.5%, and chip equipment maker Tokyo Electron slid more than 5%.
In South Korea, Samsung Electronics and SK Hynix — both instrumental in the global AI chip boom — each lost nearly 6%, while Taiwan Semiconductor Manufacturing Company (TSMC) shed 2%. The correction extended to China, where Alibaba fell over 3% and Tencent slipped more than 2%.
The rout followed an overnight selloff on Wall Street, where Palantir Technologies dropped 8% despite beating third-quarter earnings estimates, underscoring how lofty valuations are straining investor confidence. According to FactSet, the S&P 500’s forward price-to-earnings ratio has now climbed above 23, its highest level since the dot-com bubble of 2000.
“There is fear of an AI correction, and if it comes, it will sweep the rest of the market with it,” warned veteran investor Louis Navellier, as traders rushed to unwind crowded positions in high-growth tech names. Analysts say the parallels to the late-1990s internet mania are becoming harder to ignore.
Jared Bernstein, former chair of the U.S. Council of Economic Advisers, noted that investment spending on AI now accounts for a third more of the economy than it did during the internet bubble. “The gap between earnings potential and capital inflows certainly looks bubbly,” he said.
Adding to the anxiety, Michael Burry — the famed investor who predicted the 2008 financial crisis — recently disclosed short positions against Nvidia and Palantir, two of the most visible winners of the AI boom. His bearish bet has added fuel to speculation that a broader correction may be looming.
Other U.S. tech heavyweights also sank overnight: Oracle lost 4%, AMD nearly 4%, while Nvidia and Amazon both declined.
The sudden reversal underscores the fragility of the AI trade that has driven markets to record highs this year. What was once the engine of optimism for 2025’s bull run is now flashing early signs of exhaustion — raising a sobering question for investors worldwide: has the AI revolution already priced in its own perfection?
