China's AI Bubble Has Already Burst

Investors and policymakers are increasingly debating whether the AI bubble is beginning to deflate, with major AI-related stocks experiencing significant pullbacks. In China, however, signs indicate the bubble has already burst, as key publicly traded AI companies have plummeted this year. Chinese AI firm MiniMax, listed in Hong Kong in January, has fallen over 84% from its all-time high to $161. Similarly, Z.ai has dropped more than 80% from its peak, and major players like Alibaba, Tencent, and Xiaomi have all declined in recent months. The pattern mirrors China's electric vehicle industry, which saw hundreds of companies collapse amid intense competition. In the United States, AI companies face significant headwinds, with OpenAI raising only $11 billion of a planned $30 billion round at a reduced valuation. Neocloud firms like CoreWeave and Nebius are under stress, with bond yields exceeding 15%, and Elon Musk has warned that over 200 neoclouds could collapse due to funding problems.