AI stocks tumble up to 7% as global AI trade weakens; Netweb, MTAR Tech, HFCL among major losers

AI and AI infrastructure-related stocks came under selling pressure on Monday, June 29, with several counters falling sharply as concerns over stretched global AI valuations weighed on investor sentiment.

Among the biggest losers were:

• Netweb Technologies – down 7.06%
• MTAR Technologies – down 5.00%
• E2E Networks – down 5.00%
• HFCL – down 4.80%
• Sterlite Technologies (STL) – down 4.25%
• Black Box – down 2.33%

Why are AI stocks falling?

The weakness follows a broader pullback in global AI-related stocks after several Chinese hedge funds warned that the AI investment theme may have entered a “super bubble.”

According to a Bloomberg report, Wealspring Asset said global AI stocks have reached “super bubble” territory and could face a sharp correction, even though the timing remains uncertain. Shanghai Banxia Investment Management echoed similar concerns, saying conditions for an AI bubble to burst have already emerged.

At least four other Chinese hedge funds have also reportedly turned cautious on AI investments.

What are the concerns?

The concerns primarily revolve around:

• Rich valuations following the sharp AI-driven rally
• Expectations that may have become overly optimistic
• Questions over whether many AI infrastructure companies possess durable long-term competitive advantages or economic moats

The cautious global sentiment appears to have spilled over into Indian markets, triggering profit-booking across AI-linked and digital infrastructure stocks despite the sector’s strong long-term growth outlook.