SoftBank fell about 13% as AI-linked stocks across Asia sold off sharply

SoftBank shares fell sharply on Wednesday, dropping 13% in Tokyo, as investors across Asia pulled back from AI-linked stocks after a wave of selling hit U.S. tech names the night before, according to markets coverage from Wednesday’s trading sessions.

The sell-off hit fast and without hesitation, wiping gains from some of the most crowded trades in global equity markets.

Japan’s Nikkei 225 plunged below the 50,000 mark on Wednesday for the first time in weeks. The Topix index also weakened, sliding 2.27% as large-cap technology backers like SoftBank absorbed heavy losses. Advantest, which supplies semiconductor testing equipment, lost more than 8%, and Renesas Electronics dropped 5.48%, adding to downside pressure on Japan’s tech-heavy indices.

Asia tech and chip stocks saw heavy selling across markets

South Korea’s Kospi fell 5.97%, with chip giants Samsung Electronics and SK Hynix posting losses of over 7% and 8% respectively. The small-cap Kosdaq shed 5.39%.

The downturn also hit Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, which slipped 2%. In China, Alibaba dropped more than 3%, and Tencent was over 2% lower. Hong Kong’s Hang Seng index lost 1.36%, and the CSI 300 in mainland China plunged by 0.9%. Even Australia’s S&P/ASX 200 saw declines, falling 0.77%, though its exposure to AI-linked firms is smaller than the others.

Investors traced the Asian sell-off to losses in major U.S. AI and cloud names the previous evening. Palantir fell about 8%, despite reporting stronger-than-expected third-quarter results. Oracle slid 4%, AMD dropped nearly 4%, and Nvidia and Amazon both moved lower as well. Traders focused less on earnings beats and more on how stretched valuations have become. The S&P 500’s forward price-to-earnings ratio has climbed above 23, its highest level since 2000, raising concern that the market may be replaying the conditions leading up to the dot-com bubble.

Meanwhile, Michael Burry, known for predicting the 2008 financial crisis, disclosed new short positions through Scion Asset Management targeting Nvidia and Palantir. Both companies have become key symbols of the AI boom and its sky-high valuations.

The sell-off was also influenced by cautious remarks from Wall Street. CEOs of both Goldman Sachs and Morgan Stanley said this week that investors should prepare for a potential market drawdown over the next two years. Their comments landed at the same time that Capital Group suggested the “everything rally” had run too far.

Andrew Jackson, head of Japanese equity strategy at Ortus Advisors, summed up the day’s sentiment clearly: “Finally, a sell-off hits the tape as the ‘everything rally’ takes a breather after comments from the CEOs, and Capital Group that markets were due a correction.”

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