China’s AI stock bubble bursts as STAR50 index plunges 40% from July peak

China's AI stock bubble has burst, with Shanghai's STAR50 index crashing about 40% from its July high and erasing roughly $480 billion in market value, signaling a sharp reversal of the country's hottest trade this year. The collapse has hit market darlings hardest, with humanoid robot maker Unitree halving after surging 600% on debut, while GPU makers MetaX and Moore Threads have also lost half their value since July. The selloff has dragged down China's broader market, with the CSI 300 index entering bear market territory and Beijing pumping $19 billion into ETFs last week. The rout comes as Wall Street faces its own AI selloff, with Alphabet shedding $500 billion in one session and the Nasdaq posting its worst month since March 2025. Despite the crash, STAR50 still trades at about 100 times trailing earnings, and analysts expect the downturn to stall tech listings while US investors brace for $800 billion in AI spending.