According to Business Insider, Asian tech stocks plunged dramatically on Wednesday as a global sell-off intensified. Japan’s Nikkei 225 Index dropped as much as 4.7%, led by chip test provider Adventest which crashed 11%. South Korea’s Kospi fell 6.2% with Samsung Electronics down 8.2% and SK Hynix sinking 9.5%, erasing much of October’s 20% surge. Taiwan Semiconductor Manufacturing Company dropped 3% while Hong Kong’s Hang Seng Tech Index declined 2.9%. The downturn follows Michael Burry’s disclosed short bets against Palantir and Nvidia on Monday, with Palantir falling 8% despite solid earnings. Major US tech names including AMD, Oracle, and Nvidia also dropped, dragging the Nasdaq 100 down 2.1% on Tuesday.
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<h2 id="ai-bubble-jitters”>The AI bubble question
Here’s the thing – we’ve been riding this AI wave all year, and suddenly everyone’s getting nervous. Companies like Nvidia are still up 48% year-to-date, Palantir’s up 152%, but investors are starting to question whether the hype has gotten ahead of reality. Basically, we’re seeing what happens when people realize that pouring billions into AI doesn’t automatically translate to immediate profits.
And let’s be honest – how many companies actually have working, profitable AI products right now? There’s a huge gap between the promise and the current delivery. Chris Weston from Pepperstone called this a “gloomy and damp portrayal of risk,” which feels like a polite way of saying investors are getting cold feet.
The Burry factor
Michael Burry’s timing is, as always, impeccable. His hedge fund revealing short positions against Palantir and Nvidia on Monday basically poured gasoline on an already smoldering fire. Now, Burry’s famous for his “Big Short” call, so when he makes a move, people pay attention.
But here’s what’s interesting – Palantir actually reported solid results and upbeat guidance. They’re doing well! Yet the stock still tanked 8%. That tells you this isn’t just about fundamentals anymore. It’s about sentiment, and right now sentiment is shifting from “AI will save everything” to “maybe we got a bit ahead of ourselves.”
Where do we go from here?
Louis Navellier nailed it when he said there’s “fear of an AI correction” that could “sweep the rest of the market with it.” These tech giants have become so massive that when they stumble, everything else gets dragged down too. We’re talking about companies that represent huge chunks of major indexes.
The real test comes on November 19th with Nvidia’s earnings. Weston pointed out there aren’t many reasons to buy until we get closer to that catalyst. So we’re basically in this weird holding pattern where everyone’s waiting to see if the AI king can still deliver.
Look, profit-taking after massive gains is normal. These stocks had incredible runs. But the question is whether this is just healthy correction territory or the start of something bigger. Given how much of the market’s optimism has been tied to AI, if that narrative cracks, we could be in for a rough ride.
