China's AI stock bubble bursts, wiping out $480 billion

China's AI stock bubble has burst, with the STAR50 index of leading AI and semiconductor companies falling 40% in four months, erasing $480 billion in market value, Reuters reports. Excessive valuations drove the decline, as AI-related firms accounted for 42% of Chinese A-share and H-share market capitalization and 57% of trading volume. Retail investor activity fueled the rally but now amplifies market pressure, with the CSI 300 index down 20% from its June peak. Robot and chip makers suffered most, including Unitree, whose shares halved since August, and chip firms MetaX and Moore Threads, which fell 50% after earlier surges. The downturn challenges Beijing's plans for a stable stock market, as 95% of companies investing in AI reportedly failed to gain economic benefits.