Chinese AI and chip stocks lose half their value as bubble fears grow

Shares of Chinese AI, chip, and robotics companies have lost up to half their value since summer, signaling a potential deflation of the sector's investment bubble. The STAR50 index, tracking AI and semiconductor leaders, fell 40% in under four months, erasing about $480 billion in market capitalization. The CSI300 blue-chip index dropped roughly 20% from its June peak, a sharper decline than the US Nasdaq's 6% loss from its recent high. No clear trigger for the selloff exists, though analysts cite high valuations, tax bills, and potential US restrictions on Chinese data center equipment. AI-related stocks now comprise up to 42% of China's market capitalization, with retail investors dominating trading. Notable casualties include robot maker Unitree Robotics, whose shares halved since its IPO, and memory producer CXMT, which lost over a quarter of its value in a month. AI chip suppliers MetaX and Moore Threads Technology have each shed half their market value since July. While some investors see buying opportunities, others warn of further declines, and the downturn may hinder tech firms' capital-raising efforts.