China's artificial intelligence bubble has begun to burst - media

Shares of Chinese artificial intelligence developers, which until recently experienced sharp growth, have been falling rapidly in recent months.

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Since July 2026, the Shanghai Stock Exchange's STAR50 tech index has dropped by 40 percent, and the capitalization of its constituent companies has decreased by $480 billion.

"The stock market turned into an incredible speculative bubble," Reuters quoted fund manager Dong Baozhen as saying. He noted that this bubble is "currently bursting."

According to Goldman Sachs, the situation is further aggravated by the fact that AI company shares account for 42 percent of the market capitalization of all companies in China and 57 percent of the trading volume.

For example, shares of robot maker Unitree, where demand from retail investors during the initial public offering (IPO) exceeded supply by 8,000 times, have halved in value since trading began in August. Securities of chipmaker CXMT lost more than a quarter of their value over the past month. Shares of chipmakers MetaX Integrated Circuits and Moore Threads Technology, whose prices skyrocketed by 700 and 400 percent respectively during their market debuts last year, have also halved since July.

According to experts, there is no single clear reason for the stock collapse; several factors played a role: high prices, tax liabilities, as well as the risk that the US or other countries might ban the use of Chinese equipment in data centers.

At the same time, some experts see no disaster in the current sell-off of shares. In particular, Innolight and CXMT were listed alongside dozens of Chinese AI companies in an updated recommendation list published by Goldman Sachs earlier this month. In turn, BNP Paribas Securities expert William Bratton also noted that the current market situation presents a good buying opportunity.