China's AI stock bubble bursts as tech shares plunge

China’s AI and semiconductor stocks have suffered a sharp sell-off, with the mainland STAR50 index down 40% in less than four months and about $480 billion wiped from market value, Reuters reported. The decline has revived concerns over stretched valuations, unclear demand for AI-linked products, and possible restrictions on Chinese technology exports. It also complicates Beijing’s efforts to draw domestic investors into the tech sector. The fall reverses a rally that began roughly two years ago after stimulus promises. The CSI300 has dropped around 20% from June highs. Robot maker Unitree is down about half since August, while chipmakers and optical component firms have also lost roughly a quarter to 60%. Reuters data cited Goldman Sachs showing AI stocks account for about 42% of China’s market cap and 57% of turnover.