China’s STAR 50 index, which includes leading mainland companies in artificial intelligence and semiconductors, has fallen 40% from its July peak. The decline represents an estimated $480 billion in lost market capitalization and has raised questions about whether the country’s AI boom is unwinding.
The broader CSI 300 index is down 20% from its July highs, while the Nasdaq has fallen 6% from its record, reached three weeks earlier, according to the report. Chinese AI stocks account for 42% of the country’s market capitalization and 57% of trading on mainland and Hong Kong exchanges, figures attributed to Goldman Sachs.
Several companies have seen sharp declines. Humanoid-robot maker Unitree’s shares have halved since listing, despite retail demand reportedly exceeding the available supply by 8,000 times. Memory maker CXMT lost more than a quarter of its value in the past month. Chipmakers MetaX and Moore Threads, which surged 700% and 400% 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 peaks.
Bloomberg’s analysis cited a global sell-off in AI hardware, which hit Chinese shares after foreign investors had poured into the sector during the previous quarter. For Zhongji Innolight and Eoptolink, the report also pointed to a slowdown linked to Washington’s moves to bar them from supplying equipment to US data centers, potentially making it harder for the companies to sell outside China.
Reuters said there was no single clear trigger for the market drop, citing concerns including high valuations, tax burdens and the possibility of Western countries restricting Chinese components. The STAR 50 is still trading at around 100 times its earnings over the past 12 months, down from 250 times before the decline. Despite the recent losses, the long-term picture is better than it was a year ago, according to the report.
Sources: Pplware.