Unity Software Inc. (U) saw its stock plummet by 6.23% on Wednesday, as part of a wider selloff in artificial intelligence (AI) software stocks. The decline comes amidst growing concerns about potential overvaluation in the AI sector, with several prominent AI-related companies experiencing significant drops in their stock prices.

The selloff appears to have been triggered by skepticism surrounding the lofty valuations of AI companies. Palantir Technologies, another major player in the AI space, faced particularly harsh criticism from short-seller Andrew Left of Citron Research, who argued that the company's stock was "grossly overvalued" and "detached from fundamentals." This sentiment seems to have spread to other AI-focused firms, including Unity Software.

Other AI software stocks also suffered losses during the trading session. SoundHound AI (SOUN) fell 9%, Tempus AI declined 7%, C3.ai dropped 5%, and Duolingo saw a decrease of over 4%. The widespread nature of the selloff suggests that investors may be reassessing the entire AI software sector, potentially impacting Unity's stock price despite the absence of company-specific news. As the AI industry continues to evolve rapidly, investors appear to be growing more cautious about the high valuations assigned to companies in this space.