China's AI stocks lose $480 billion as tech shares plunge from highs

China's artificial intelligence stock market has plunged, losing approximately $480 billion in value as leading tech shares fell sharply from earlier highs, raising doubts about whether investor optimism had overvalued the sector. The STAR50 index tracking Chinese technology and semiconductor firms declined nearly 40% in three and a half months, trading at roughly 100 times trailing earnings after the sell-off, compared to about 250 times previously. The CSI 300 index also dropped 20% since June, reflecting broader market fears over high valuations, AI expenditure, taxation, and potential foreign export restrictions. Companies like MetaX Integrated Circuits and Moore Threads Technology, which surged up to 700% on their 2025 debuts, lost around half their value from July peaks. The slump pressures Beijing's efforts to use capital markets for funding strategic industries, as AI-related stocks now represent about 42% of China's market cap.