Shares in Japan’s SoftBank Group closed 10% lower on Wednesday amid a broader drop in AI-linked companies, as investors turned wary of stretched valuations in the market’s most crowded trade. The sell-off also weighed on global indices trading, reflecting a broader risk-off sentiment spilling over into equity, forex, and crypto markets.
SoftBank, which has built a broad portfolio of AI-related investments spanning infrastructure, chips, and application firms, lost about $23 billion in market cap. The group’s shares recorded their worst day since April, when they plunged over 12%, according to data from LSEG.
The group holds a controlling stake in U.K.-based Arm Holdings, whose chip designs power mobile and AI processors, and this year it acquired Ampere Computing to strengthen its AI data-center capabilities. Nasdaq-listed Arm Holdings fell 4.71% overnight.
SoftBank has also backed several leading AI model developers such as OpenAI, as well as startups like OpusClip and Tempus AI, which apply machine learning in video editing and precision medicine respectively. For traders tracking AI-related assets, these moves echo shifts across the crypto investment and forex trading spheres, where sentiment and valuation risks often move in tandem with broader technology trends.
Tech Stocks Under Pressure Across Asia
Other Japanese tech stocks also fell sharply. Semiconductor testing equipment maker Advantest declined more than 5%, Renesas Electronics lost 4.27%, and Tokyo Electron, a chip production equipment maker, dropped 4.08%.
In South Korea, memory chip giants Samsung Electronics and SK Hynix lost 4.1% and 1.19% respectively. The rally in chipmakers earlier this year had pushed South Korea’s Kospi Index to record highs now under pressure amid renewed valuation fears.
Meanwhile, Taiwan’s TSMC, the world’s largest contract chipmaker, fell 2.99%. In China, Alibaba declined over 3%, while Tencent pared losses to trade flat. Such broad selloffs across Asia-Pacific tech shares have implications for indices trading strategies, as traders rebalance exposure between equity and crypto markets to hedge against volatility.
Global Market Repercussions
The declines came after U.S. software company Palantir dropped about 8% overnight even after beating earnings expectations as sky-high AI valuations hit investor sentiment. The AI-led rally has pushed the S&P 500’s forward P/E above 23, its highest since 2000, according to FactSet.
This surge has drawn comparisons to the dot-com bubble, with some analysts warning that today’s enthusiasm for AI and crypto investment could mark a speculative peak. Market veteran Louis Navellier noted, “There is fear of an AI correction, and if it comes, it will sweep the rest of the market with it due to the heavy weight of the leading names.”
Some strategists say valuations of AI companies now resemble the late 1990s tech boom, with share prices running far ahead of credible profit expectations a red flag for those developing forex trading strategies and indices trading portfolios that rely on tech-sector stability.
Analysts React: Bubble or Brief Correction?
Jared Bernstein, who headed the Council of Economic Advisers under the Joe Biden administration, said the share of the economy devoted to AI investment is now “almost a third higher than during the internet bubble,” warning that the gap between earnings potential and spending “certainly looks bubbly.”
Meanwhile, Michael Burry, famed for predicting the 2008 financial crisis, has also drawn attention by betting against AI leaders such as Palantir and Nvidia. His fund, Scion Asset Management, disclosed short positions in both firms a move closely watched by traders managing diversified portfolios across equities, indices trading, and crypto investment products.
Other U.S. tech majors also retreated overnight: Oracle lost 4%, AMD dropped nearly 4%, while Nvidia and Amazon also declined. These parallel selloffs prompted some investors to rotate toward defensive positions, including stablecoins and crypto market hedges, as part of broader forex trading strategies during periods of heightened risk aversion.
Risk-Off Mode: Temporary or Structural?
Despite the steep decline, some analysts view the selloff as temporary. Dan Ives, Managing Director and Senior Equity Research Analyst at Wedbush, said:
“In my view, this is short-lived. I don’t believe this is the start of a more structural selloff. It’s just a lot of nervous, sort of white-knuckle trading. The selloff we’ve seen along with the correction across crypto and others reflects a massive risk-off phase.”
His comments underline the interconnectedness between AI stocks, crypto markets, and forex trading strategies in today’s global financial ecosystem. With investor sentiment swinging rapidly between risk-on and risk-off, traders across asset classes from indices trading to crypto investment are closely watching how AI valuations stabilize in the coming weeks.
