AI Stock Euphoria Cools as SoftBank Value Plummets, Democrats Sweep Elections
A wave of investor caution swept through global markets yesterday, triggered by a significant drop in SoftBank’s market capitalization and a broader retreat from AI-linked stocks, even as Democrats secured key victories in U.S. elections.
SoftBank’s market cap fell by approximately $32 billion, with shares plunging over 14%, mirroring declines across Asian markets as investors reassess valuations in the highly competitive AI sector. This comes after strong earnings reports from AMD and Palantir failed to sustain market momentum, with Palantir shares dropping nearly 8% despite exceeding expectations. Even leading AI companies like Nvidia and Amazon experienced pullbacks, signaling a potential shift in investor sentiment. Some analysts believe this reflects a growing concern that current stock prices aren’t supported by underlying revenue growth, particularly given the substantial capital expenditure required for AI development. The correction highlights the risks of concentrated investment in a single sector.
Concerns about a market correction are mounting, with Ritholtz Wealth Management CEO Josh Brown stating on Tuesday that the stock market is already undergoing a correction, despite major indexes not yet reflecting it. Meanwhile, consolidation is anticipated within the private equity industry, as KKR & Co. co-CEO Joe Bae noted there are more private equity funds in North America than McDonald’s franchises – approximately 19,000 funds versus 14,000 restaurants. This oversupply is expected to drive a need for stronger governance and higher returns. For more on market trends, see analysis from Investopedia.
In the U.S., Democrats achieved a clean sweep in key elections held Tuesday in New Jersey, Virginia, and New York, where self-described democratic socialist Zohran Mamdani secured a victory. Separately, Nvidia is deepening its presence in India through a $2 billion deep tech alliance, joining the India Deep Tech Alliance (IDTA) to mentor AI startups in the world’s third-largest startup ecosystem – a move that could accelerate Nvidia’s growth in the region.
Nvidia is set to report second-quarter earnings today after the closing bell, and officials have indicated they will provide further insight into the company’s strategic outlook and the evolving AI landscape.
NVIDIA CEO Jensen Huang speaks during the Live Keynote Pregame during the Nvidia GTC (GPU Technology Conference) in Washington, DC, on Oct. 28, 2025.
Jim Watson | AFP | Getty Images
The euphoria around artificial intelligence is colliding with the limits of reality, and cracks are emerging.
Last night, tech giants like AMD smashed expectations on AI chip demand, and Palantir reported another quarter of strong growth. Yet the Nasdaq fell, revealing Wall Street’s playlist is stuck on one track: AI mania.
Palantir — the poster child of that obsession — plunged nearly 8% despite its blowout quarter, while Oracle dropped almost 4%. Even AI darlings Nvidia and Amazon pulled back.
The message? It’s AI or nothing — and that tunnel vision is flashing warning signs.
Some CEOs are warning of a market correction, others of an inevitable mismatch between revenues and the massive capital expenditure needed to power AI. One CEO even told CNBC that stocks are in a correction, even if the S&P 500 hasn’t reflected it.
Perhaps it’s time investors step off the hype train and look at the broader market — even the strongest empires fall when they start believing their own legend.
What you need to know today
SoftBank market cap drops by about $32 billion. Shares plunged more than 14% Wednesday amid a broader drop in Asian AI-linked companies as investors turned wary of stretched valuations in the market’s most crowded trade.
PE industry consolidation. “How is it that there are more private equity funds in North America than there are McDonald’s franchises,” said KKR & Co’s co-CEO Joe Bae on Tuesday. PE managers are bracing for a wave of consolidation as investors demand higher returns and stronger governance. For reference, there are about 14,000 McDonald’s in the U.S. and 19,000 private equity funds.
Democrats sweep U.S. elections. Democrats made a clean sweep in the three biggest contested elections in the U.S. on Tuesday night, including in New Jersey and Virginia. In New York, self-described democratic socialist Zohran Mamdani beat out opponents Andrew Cuomo and Republican nominee Curtis Sliwa.
Asian markets tank. Japan’s Nikkei 225 dipped below the 50,000 mark on Wednesday amid a wider decline in Asia markets as investors fled AI-related stocks. South Korea’s Kospi also saw losses of as much as 6.16%, with chip heavyweights Samsung Electronics and SK Hynix posting losses.
[PRO] Stocks in correction? CEO of Ritholtz Wealth Management Josh Brown said Tuesday the stock market is going through a correction, even if the indexes have yet to reflect it.
And finally…
The Nvidia logo is displayed on a building at Nvidia headquarters on August 27, 2025 in Santa Clara, California. Chip maker Nvidia will report second-quarter earnings today after the closing bell.
Justin Sullivan | Getty Images News | Getty Images
Nvidia deepens India footprint with $2 billion deep tech alliance to mentor AI startups
Nvidia will help train and mentor emerging deep tech startups in India as a founding member of a $2 billion investment alliance, deepening its presence in the world’s third-largest startup ecosystem.
The U.S. chipmaker has joined the India Deep Tech Alliance (IDTA) — a group of private equity and venture capital investors pledging $2 billion for deep tech investments — as a founding member.
Deep tech startups are an umbrella term for emerging companies in semiconductors, space, AI, biotech, robotics, and energy.
— Priyanka Salve
