China's technology sector suffered a sharp selloff as investors pushed down shares of leading artificial intelligence and chip companies, leaving major indexes weaker and wiping out vast market value, Reuters reported.
The STAR50 index of AI and semiconductor firms fell about 40 percent over the past four months, Reuters said, a slide that erased roughly $480 billion in market value. Goldman Sachs estimated AI-related stocks account for about 42 percent of China’s market capitalization, and the STAR50 traded at multiples near 100 times earnings compared with roughly 30 times on the Nasdaq, according to market commentary.
Market participants cited stretched valuations, tax pressure and export worries for the rout, posts on trading platforms reported and a media summary noted. Traders said the heavy concentration of AI names magnified losses and left many retail investors exposed, Reuters and a media summary said.
Individual companies highlighted the downturn. Unitree shares have halved since a high-profile initial public offering in August, Reuters reported. Chipmaker CXMT lost more than a quarter of its value over the past month, according to Reuters. At the same time, some large funding moves underlined continued corporate backing. Bloomberg reported that DeepSeek raised $15 billion in a major funding round, and Huawei secured a $2.3 billion loan from Chinese banks to support AI chip development.
Market Impact And Reactions
Regulators and state-backed investors tried to temper volatility by selling into rallies, Reuters reported, part of a government effort to curb excesses. Still, sources warned that weaker external demand and steps by foreign governments may be amplifying pressure on the sector.
Reports pointed to US measures such as tariffs and possible bans on Chinese suppliers to data centers, and highlighted concerns over companies like Zhongji Innolight that provide optical transceivers crucial for large-scale AI data transfers. Reuters said the role of export curbs and economic hostility may be understated in analysts’ accounts.
The fallout pushed broader indexes lower. A separate summary of social posts and market commentary said the CSI 300 slipped into bear territory, down about 20 percent from June and enduring a record 12-week losing streak. That piece also warned the coverage was drawn from social posts and may evolve, and noted that an automated assistant called Grok can make mistakes and should be verified.
Industry filings and disclosures added context. Reuters cited a disclosure by Anthropic showing an $80 billion loss in an IPO filing and plans to spend another $1 trillion on data centers over the next decade, underscoring how big projected costs and delayed returns have fed concerns about profitability.
