The tech world is in a frenzy as fears of an AI bubble have sent global tech shares tumbling. The recent plunge in major technology company stocks has investors on edge, with concerns about the sustainability of the AI hype. The market's sudden shift has been particularly hard on Asian indexes, with Japan's exchange leading the charge, dropping over 3% as tech investment giant SoftBank tumbled more than 10%. The situation is not confined to Japan; the US has also seen a downturn in AI-related stocks, with the trader behind The Big Short betting $1.1bn on a price fall for Nvidia and Palantir. Financial analyst Farhan Badami attributes the market's reaction to investor fatigue over AI and the current earnings run, questioning the long-term viability of the AI hype. Despite the recent drop, tech shares have been on a rollercoaster ride this year, with major investments in firms like Amazon, Intel, and AMD propelling markets worldwide. However, the market's sudden shift has been a wake-up call, with tech giants like Amazon and Nvidia experiencing significant drops in stock prices. SoftBank, a major player in the tech investment landscape, has also suffered a sharp decline, leaving analysts like Vincent Fernando to ponder the impact of the recent 'sharp rally' in its shares. The concern is that the company's heavy investment in AI development may not yield sufficient returns, raising questions about the market's ability to sustain such high valuations. The correction in tech stocks is expected to continue, with analysts like Mr. Badami from eToro predicting that investors will reassess the super-high valuations, especially those fueled by AI enthusiasm. The key question remains: can the AI industry sustain its current levels of spending and investment? The market's reaction suggests a cautious approach is warranted.
