Shares of Japan’s SoftBank Group (OTC:SFTBY) declined by 7% on Friday amid a broader slump in AI-related stocks driven by valuation concerns.
This comes after SoftBank gained 2.9% in the previous trading session, following a 10% plunge on Wednesday. This week alone, the stock has wiped nearly 20% off its value, which is nearly $51 billion from the tech conglomerate’s market cap.
The stock closed down at JPY 21,700 ($141.36) on Friday.
Lofty Valuation Concerns Spark Sell-Off
The mega-deals and enthusiasm around artificial intelligence (AI) have raised concerns that markets might be experiencing an “AI bubble”. Some experts argue that the valuations of AI companies are starting to resemble the dot-com bubble of the late 1990s, with stock prices rising well beyond realistic financial performance.
SoftBank has sought to strengthen its AI plays through investments and acquisitions in different areas of technology. Apart from Arm Holdings (NASDAQ:ARM), the British chip designer it controls, the company has a major stake in ChatGPT owner OpenAI, and it bought the robotics division of Swiss engineering firm ABB (OTC:ABBNY) in a $5.4 billion deal last month.
Other Japanese tech stocks also declined as AI-related companies in the U.S. fell overnight. Semiconductor testing equipment maker Advantest dropped over 5% and chipmaker Renesas Electronics fell 3.75% on Friday.
Elsewhere in Asia, Nvidia-supplier SK Hynix was down over 2% and its South Korean peer Samsung fell (OTC:SSNLF) 1.3%. TSMC, the world’s largest chipmaker, saw its stock drop 0.34%.
In the U.S. on Thursday, Qualcomm (NASDAQ:QCOM) dropped over 3%, Advanced Micro Devices (NASDAQ:AMD) slipped 7%, while Palantir (NASDAQ:PLTR) and Oracle (NYSE:ORCL) were down about 6.8% and 2.6%, respectively.
This comes despite stronger-than-expected earnings from a group of high-flying stocks this week, as traders are hitting the sell button—reminding that no story, not even artificial intelligence, is immune to the math.
The Global X Artificial Intelligence & Technology ETF (NYSE:AIQ) is down about 4% this week.
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