China’s STAR 50 index, which tracks leading artificial intelligence and semiconductor companies on the mainland, has fallen 40% from its peak in July, wiping about $480 billion from its market value, according to the figures reported in the source material. The decline has prompted renewed debate over whether China’s AI boom is turning into a bubble burst.
The retreat has extended beyond technology stocks. The CSI 300, an index of major listed Chinese companies, is down 20% from its July high. By comparison, the US Nasdaq is reported to have fallen 6% from its record, reached three weeks earlier. Bloomberg described the STAR 50’s performance as the worst among major technology indexes globally this half-year.
The sell-off matters in part because Chinese AI stocks account for a substantial share of the country’s market activity. Goldman Sachs estimates they represent 42% of China’s market capitalization and 57% of trading on mainland and Hong Kong exchanges. The market is also dominated by retail investors, who may react sharply to changing trends.
Several companies illustrate the scale of the swings. Humanoid-robot maker Unitree, whose shares drew retail demand far exceeding the available offering, has lost half its value since trading began. Memory maker CXMT is down more than a quarter over the past month. Chipmakers MetaX and Moore Threads, which surged 700% and 400% respectively on their 2025 debuts, have each lost half their value since July. Optical-component suppliers Zhongji Innolight and Eoptolink are down close to 60% from their summer highs.
Bloomberg’s analysis points to a global hardware sell-off in AI stocks, following a surge of foreign investment in the sector in the previous quarter. The share prices of Zhongji Innolight and Eoptolink may also have been affected by Washington’s moves toward blocking them from supplying equipment to US data centers. Reuters, however, reported no single clear trigger, citing elevated valuations, tax burdens and the risk of Western restrictions on Chinese components as possible concerns.
The drop has not erased the index’s earlier gains. The STAR 50 still trades at roughly 100 times its earnings over the past 12 months, down from about 250 times. The index is also relatively young and concentrated in AI and semiconductors, unlike broader and more diversified benchmarks such as the Nasdaq and Dow Jones. Its heavy retail participation can amplify both rallies and declines, leaving it uncertain whether the latest fall will persist or prove temporary.
Sources: Xataka.