Shares of major technology companies have declined due to concerns regarding valuations associated with the artificial intelligence (AI) sector. This year, investors have expressed apprehension about a potential “AI bubble,” coinciding with record-high valuations in technology stocks.
On Wednesday, major Asian indexes experienced significant declines, particularly in Japan, where the stock market dropped by more than 3%. A notable factor was a steep fall of over 10% in shares of SoftBank, a leading tech investment firm. Concerns about AI valuations in the United States were amplified by a move from a trader known for predicting market downturns. This individual has reportedly placed a $1.1 billion bet that AI-related stocks, specifically Nvidia and Palantir, will experience price decreases.
Financial analyst Farhan Badami pointed out investor fatigue regarding AI hype and recent earnings, which he suggests has contributed to declines in AI company valuations. Despite this, markets have generally risen over the past year, with substantial investments in companies such as Nvidia, Intel, and AMD. For instance, Amazon’s stock recently reached an all-time high following the announcement of a $38 billion deal with OpenAI.
However, on Wednesday, shares of many tech companies fell; Amazon saw a decrease of 1.84%, and Nvidia, which recently achieved a valuation of $5 trillion, dropped nearly 4%. SoftBank’s decline particularly impacted Japan’s Nikkei index, with its heavy investments in AI development raising questions about potential overexpenditure without adequate returns.
Other tech shares in Asia also faced losses, including South Korea’s Samsung, which fell by more than 4%, and TSMC, which reported a nearly 3% decline. Analysts suggest that the correction in tech stock valuations may persist, as concerns about inflated valuations and high spending relative to earnings continue to shape investor sentiment.
Source: https://www.bbc.com/news/articles/c867vyn2evlo?at_medium=RSS&at_campaign=rss