China's AI Stock Bubble Bursts, STAR50 Index Plunges 40%

China's AI stock bubble has burst, with the STAR50 index of AI and semiconductor leaders plunging 40% in under four months, erasing about $480 billion in market value and shaking investor confidence in state-backed tech firms. The selloff, which has also dropped China's broad blue-chip index about 20% from June highs, follows a two-year rally fueled by stimulus promises. Retail favorites like robot-maker Unitree and chipmaker CXMT have seen shares halve or drop sharply, with traders citing high prices, tax bills, and potential US export bans as contributing factors. The crash contrasts with a milder 6% Nasdaq drawdown and may slow tech fundraising, though some experts see long-term value in the correction. Investors are shifting to defensive assets, while state regulators face questions about market structure distortions from over-weighting tech stocks.