China’s AI stock bubble has burst, Reuters reports, as $480 billion vanishes

China’s AI stock frenzy has hit the wall. According to Reuters, the country’s AI bubble has burst, and the damage is already measured in hundreds of billions of dollars. The STAR50 index, which tracks China’s AI and semiconductor leaders, has dropped nearly 40% from its July peak. That slide has wiped out approximately $480 billion in market value in less than four months. How bad is the damage The pain is not confined to speculative tech names. China’s CSI 300 index, the benchmark for blue-chip stocks, is down around 20% from its June highs. Some of the most hyped individual names have fared worse. Unitree’s shares have halved since the company listed in August. CXMT has fallen more than 25% in the past month alone. MetaX Integrated Circuits and Moore Threads have both seen their share prices roughly cut in half since July 2026. Why this one hits harder The scale of AI’s footprint in Chinese markets explains why the fallout spread so widely. According to Goldman Sachs, AI-related stocks accounted for 42% of the total market capitalization of China’s stock market. The same group made up 57% of turnover across A-shares and H-shares. In other words, more than half of all trading acti...