AI Stocks Hit a Wall as SoundHound Soars, Mistral Raises $1.5B, and Crypto Scams Spark Regulatory Heat

Investors are waking up to a hard truth, the AI hype machine is cooling, and fast. Big cap AI stocks stumbled today while younger firms stole the spotlight. Meanwhile, French unicorn Mistral pulled in a massive $1.5B, and crypto AI convergence showed signs of life (and fraud) as regulators circle the space.

📈 AI Market Movers & Trends

The AI selloff has begun, but don’t confuse a pop with a crash. Nvidia wobbled ahead of earnings, major chip players saw red, and investors are finally asking the magic words, “Show me.” SoundHound AI, notably, didn’t flinch, adding another 12% today after its 26% surge last month, as bulls reevaluate whether voice first AI’s time has arrived.

The broader mood? Cautious optimism, with emphasis on “cautious.” Nasdaq and S&P tech stocks closed down 1.7% and 1.3% respectively, dragged by semiconductor giants like AMD and Intel. Even Nvidia, AI’s poster child with a $2.2T valuation, traded flat despite looming earnings hype. Wall Street is watching closely, Can training chip demand outlast the first wave of model deployments?

Meanwhile, upstarts like Nebius, the AI infra play that just inked a beast of a deal with Microsoft, are making noise. After announcing a multi year collaboration to build secure, sovereign cloud regions for European AI devs, NBIS shares jumped 15%. It’s no small feat for a little known infrastructure firm to ride shotgun with Redmond.

Investors aren't ditching AI, they're just getting smarter. As speculative froth simmers, long term bets on infrastructure, applied AI, and European plays are gaining favor.

💸 Funding Watch

Mistral just raised $1.5 billion. Let that sink in.

The French language model contender, barely a year old, attracted capital from the crème of European tech, ASML, Xavier Niel’s Kima Ventures, and even a rumored strategic partnership from STMicroelectronics. It now joins the elite cohort of model builders challenging OpenAI and Anthropic, with a $6B post money valuation and battlefield credibility in compute efficiency and multi lingual deployment.

The deeper play? European governments are done watching American firms eat their AI lunch. Mistral is emerging as a tech sovereignty flex, and may end up the EU’s unofficial answer to OpenAI.

Closer to home, YC backed Motion raked in $38M to build the “Microsoft Office for AI agents.” It sounds grand, but the founders previously built productivity tools used by 3M+ users, so there’s meat under the mission. Menlo Ventures co led the round alongside SignalFire, signaling growing mainstream confidence in multi agent architecture for enterprise.

Other early stage momentum includes Architect AI ($4.75M for “agentic” websites) and Lovable, which hit unicorn status just eight months post launch. The latter’s vertical? Personalized AI for ecommerce, think Shopify meets GPT for brand creators. Investors are chasing smaller diamonds now that the “foundation model” wars have crowned their kings.

Also worth watching, Menlo Ventures’ new $100M AI accelerator with Anthropic. Don’t miss the meta narrative, top VCs aren’t just seeding product startups, they’re building entire ecosystems around their model bets.

🪙 Crypto Moves

AI crypto is running hot again, in all directions. Sleepless AI ($AI), the token behind an “emotionally aware” metaverse chatbot, shot up 42% this week on absolutely zero fundamentals. Traders are chasing vapor, and regulators are taking notes.

California’s DFPI issued new warnings about AI themed token scams after LightChain AI (yes, that’s a real name) reportedly defrauded investors using deepfaked Discord AMAs. No arrests yet, but Reddit’s crypto scams thread is lighting up like it’s 2021 again.

On the legit side, Kraken added fresh signal by launching a category page devoted to AI tokens, including ChainGPT, Render, and The Graph. This isn’t just marketing fluff; it’s a bet on convergence. These tokens are pushing into real use cases, from decentralized inference (Render) to smart contract generation (ChainGPT). Kraken reports strong institutional inflows into this bucket, up 17% MoM by volume.

Token Metrics, the AI powered crypto research firm, also unveiled a new Nasdaq style index tracking AI focused blockchain projects. Early backtests show correlation with both ETH and Nvidia stock... which tells you everything you need to know about what traders believe is coming next.

Bottom line, There’s real innovation in AI x crypto, but also a lot of noise. Smart money is moving up the stack, from meme fueled launches to infrastructure layer plays with core tech and real users.

📊 Stay tuned for tomorrow’s MarketPulse or join our free Discord community for daily briefings from Midas AI.