KINGSOFT (03888) experienced a sharp decline in the Hong Kong stock market, plummeting 5.03% during Wednesday's trading session. The significant drop comes amid a broader selloff in AI concept stocks, fueled by growing concerns over high valuations in the artificial intelligence sector.

The downward pressure on KINGSOFT and other tech stocks in Hong Kong appears to be influenced by several factors. A notable overnight sell-off in U.S. tech stocks has spilled over into Asian markets, with investors becoming increasingly cautious about AI-related companies. Adding to the market jitters, renowned investor Michael Burry, known for his role in "The Big Short," has reportedly taken substantial short positions in major AI players like Nvidia and Palantir, with put options totaling over $1 billion in notional value.

Despite the current volatility, some analysts remain optimistic about the long-term prospects of Hong Kong's tech sector. Dongwu Securities suggests that while short-term fluctuations may persist due to influence from U.S. tech giants, Hong Kong's tech valuations appear attractive from a mid-to-long-term perspective. The brokerage anticipates potential improvements in earnings per share (EPS) for Hong Kong-listed tech companies by Q1 next year, as competition among tech leaders approaches its peak.