According to Business Insider, Asian tech markets got hammered Wednesday with Japan’s Nikkei 225 plunging 4.7% and South Korea’s Kospi dropping a staggering 6.2%. Chip testing firm Advantest led the bloodbath with an 11% nosedive, while Samsung Electronics fell 8.2% and SK Hynix dropped 9.5%. Taiwan Semiconductor Manufacturing Company slid 3% and Hong Kong’s tech index fell 2.9%. The selloff came after “Big Short” investor Michael Burry revealed short positions against AI darlings Nvidia and Palantir, with Palantir dropping 8% despite solid earnings. The Nasdaq 100 fell 2.1% Tuesday as the AI correction fears spread globally.
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The AI Bubble Trouble
Here’s the thing about market manias – they always look brilliant until they don’t. We’ve been riding this AI wave for months where basically any company that whispered “artificial intelligence” saw their stock pop. But now investors are waking up to the reality that valuations have completely detached from actual progress. I mean, how many of these companies can actually deliver on their billion-dollar AI promises? The market’s starting to ask that exact question.
Burry’s Bearish Bet
Michael Burry timing his Nvidia and Palantir shorts right before this selloff is either brilliant or incredibly lucky. But his move definitely added fuel to the fire. When the guy who famously predicted the 2008 housing crash starts betting against the AI poster children, people pay attention. It’s creating this self-fulfilling prophecy where everyone’s looking around wondering who’s going to sell first. And once that panic starts, it spreads faster than ChatGPT can generate bad poetry.
Profit-Taking Panic
Let’s be real – most investors in these AI stocks are sitting on massive gains. Palantir’s still up 152% this year even after the drop. Nvidia’s up 48%. So when the momentum shifts, everyone races for the exits at once. It’s not necessarily that the AI story is broken, but that the valuations got way ahead of themselves. We’re seeing classic profit-taking behavior, where people lock in gains before the music stops.
What’s Next?
The big question now is whether this is just a healthy correction or the start of something worse. All eyes are on Nvidia’s earnings November 19th – that’s the next major catalyst that could either rescue the AI trade or sink it further. The problem is there’s not much reason to buy until we see if the AI hype can translate into actual, sustainable earnings growth. We might be entering that painful period where the market separates the real AI players from the companies just riding the wave. And that separation could get messy.
