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Dow futures rose slightly Tuesday night, while futures tied to the tech-heavy Nasdaq slid, as investors continue to grapple with where megacap tech stocks head from here.

Dow Jones Industrial Average futures rose 36 points, or nearly 0.1%. S&P 500 futures fell almost 0.2%, while Nasdaq 100 futures tumbled nearly 0.4%.

Wall Street is coming off a losing session for the major averages. The S&P 500 declined 1.2%, while the Nasdaq Composite dropped 2%. The Dow Jones Industrial Average lost 251 points, or 0.5%.

That comes after Palantir dropped about 8%, even after besting expectations for the third quarter, as investors worried that valuations for the software company — and the broader AI theme — have gotten untenable. After all, Palantir is trading at more than 200 times forward earnings.

Yet many investors remain optimistic that the long-term trend is still favorable for tech stocks, even if there is a near-term pullback, given the strength of spending in AI infrastructure.

“I don’t think that this is concerning today,” Liz Young Thomas, head of investment strategy at SoFi, said on CNBC’s “Closing Bell” on Tuesday. “I do think that as far as we’ve gotten, this extended, is concerning eventually, but I still think that we’re going to run into year end.”

“I still think the chase is on. I still think the large cap love affair is on. And that’s probably not going to change over the longer term period,” she continued. “But today, I think we were looking for an excuse.”

On the economic front, investors will continue to seek clarity using alternative data in lieu of government reports. On Wednesday, the ADP private payrolls report is set to be released. Weekly mortgage applications and ISM services data are also on deck.

Earnings season continues with McDonald’s reporting Wednesday before the open. Of the 360 S&P 500 companies that have reported thus far, roughly 82% have beaten expectations, according to FactSet data. The S&P 500 is set to post a blended growth rate of more than 12%.

Shares in Japan’s SoftBank Group plunged more than 14% Wednesday amid a broader drop in Asian AI-linked companies, tracking declines in U.S. peers, as investors turned wary of stretched valuations in the market’s most crowded trade.

SoftBank, which has built a broad portfolio of AI-related investments spanning infrastructure, chips, and application firms, lost about $32 billion in market cap. If losses hold, the group’s shares will clock their worst day since last August when they tanked over 18%, data from LSEG showed.

SoftBank has a controlling stake in U.K-based Arm Holdings, whose chip designs power mobile and AI processors, and acquired Ampere Computing this year to strengthen its AI data-center capabilities. Nasdaq-listed Arm Holdings saw shares drop 4.71% overnight.

The group has backed leading AI model developers such as OpenAI, as well as application-level startups like OpusClip, a generative-AI video-editing platform, and Tempus AI, which applies machine learning to precision medicine.

SoftBank has now erased nearly $50 billion in market cap over two days. Shares had dropped over 7% on Tuesday as well.

Other Japanese tech stocks also fell: semiconductor testing equipment maker Advantest declined over 8%, chipmaker Renesas Electronics lost 5.48%, Tokyo Electron, a chip production equipment maker, fell more than 5%.

South Korean memory chip giants Samsung Electronics and SK Hynix lost nearly 6%. The surge in chipmakers SK Hynix and Samsung Electronics this year has helped push South Korea’s Kospi Index to record highs.

Taiwan’s TSMC, the world’s largest contract chipmaker, fell 2%. Alibaba declined over 3% while Tencent was more than 2% lower.

The declines come after U.S. software company Palantir dropped about 8% overnight, even after topping expectations for the third quarter, as sky-high valuations across AI sector hit investor sentiment. The AI-led rally has pushed the S&P 500’s forward P/E above 23 — its highest since 2000, according to FactSet.

The frenzy around AI has sparked concerns that markets could be in the midst of a tech bubble.

“There is fear of an AI correction, and if it comes, it will sweep the rest of the market with it due to the heavy weight of the leading names,” market veteran Louis Navellier wrote in a note.

Some analysts say valuations of AI companies increasingly resemble the dot-com boom of the late 1990s, with share prices soaring far ahead of credible profit expectations.

Jared Bernstein, who headed the Council of Economic Advisers during the Joe Biden administration, noted that the share of the economy devoted to AI investment is almost a third higher than during the internet bubble, adding that the gap between earnings potential and spending “certainly looks bubbly.”

Michael Burry, famed for predicting the 2008 financial crisis, has also stirred controversy with his bet against AI darlings Palantir and Nvidia. In a recent filing, Burry’s Scion Asset Management revealed significant short positions on these firms, which are at the forefront of AI and chip technology.

Besides Palantir, other U.S. tech majors also fell overnight: Oracle lost 4%, Chipmaker AMD dropped nearly 4%, while Nvidia and Amazon also declined.

“In my view, [the selloff] is short lived. I don’t believe this is a start of a more structural sell off,” said Dan Ives, managing director and senior equity research analyst at Wedbush. “I think it’s just a lot of nervous, sort of white knuckles and the selloff that we saw … along with the selloff that we’ve seen crypto and others, it was just a massive risk off.”