AI concept stocks in Hong Kong saw broad declines. As of press time, KINGSOFT (03888) fell 4.37% to HKD 31.94, HUA HONG SEMI (01347) dropped 4.09% to HKD 72.7, and BABA-W (09988) declined 2.58% to HKD 155.1. Market sentiment was weighed down by growing concerns over high AI valuations, following an overnight sell-off in U.S. tech stocks. Notably, investor Michael Burry, famous for his role in "The Big Short," has reportedly taken substantial short positions in Nvidia and Palantir, with put options totaling over $1 billion in notional value, accounting for 80% of his portfolio. Earlier, Burry had issued a cryptic warning about market euphoria targeting retail investors.

Dongwu Securities noted in a recent report that overseas markets remain wary of a potential AI bubble in U.S. stocks, compounded by mixed earnings from major tech firms. While Google’s cloud and search businesses exceeded expectations—supporting the narrative that AI tools are boosting ad revenue—Meta’s rising capital expenditures raised concerns about future profit erosion. This cautious sentiment has spilled over to Hong Kong’s tech sector, where investors are adopting a wait-and-see approach.

However, the brokerage believes that despite short-term volatility influenced by U.S. tech giants, Hong Kong’s tech valuations appear attractive from a mid-to-long-term perspective. With competition among tech leaders nearing its peak, Dongwu expects marginal improvements in Hong Kong-listed tech earnings per share (EPS) by Q1 next year.