Shares in South Korean AI infrastructure provider Elice plunged 32% on their trading debut on Tuesday, adding to concerns over valuations and returns across the AI sector as investor sentiment towards data centre operators deteriorates, according to a report by Bloomberg.

The Seoul-based company's shares fell as much as 38% before closing at 61,500 won, marking the worst opening-day performance for a major South Korean IPO on record. The selloff followed a $151m offering priced at the top of its marketed range, which attracted retail demand more than 400 times the shares available.

The decline reflects mounting pressure on AI infrastructure valuations amid rising borrowing costs and uncertainty over returns on large-scale capital expenditure.

US-listed CoreWeave has lost more than half its value since its May peak, while its bonds fell sharply last week. Australia's Firmus Grid has abandoned IPO plans over valuation concerns, while data centre operator AirTrunk has delayed a proposed listing and Nscale has faced investor resistance over its target valuation.

Albert Yong, managing partner and chief investment officer at Petra Capital Management, said sentiment towards AI infrastructure companies had weakened, particularly in the US, with valuations increasingly volatile and disconnected from underlying fundamentals.

Elice's selloff came despite strong financial performance. The company reported a 200% increase in first-half revenue to 34.4bn won and an operating profit of 10.3bn won, while EBITDA increased more than elevenfold to 23.2bn won.

Analysts expect revenue to grow 83% in 2026, with an operating margin of approximately 33%, although questions remain over the sustainability of those earnings.

Backed by venture capital investors including Vertex Ventures and Altos Ventures, Elice plans to use the IPO proceeds to expand its AI data centre infrastructure in South Korea and internationally.

The disappointing debut adds to signs of increasing investor scrutiny of AI infrastructure businesses, as concerns over capital intensity, leverage and profitability weigh on the broader sector.