In China, the AI bubble has already burst

7. [News • 12 hours ago Nvidia will invest $3 billion in Meta as part of an expanded partnership, including work on the Muse agent platform.](https://finance.yahoo.com/technology/ai/articles/nvidia-investing-3-billion-meta-092301934.html?.tsrc=fin-notif)

8. [News • 12 hours ago AI chips out, energy, staples and hot tubs in, as the average S&P 500 stock sees its sharpest reversal in decades.](https://finance.yahoo.com/markets/article/big-tech-just-went-from-crushing-the-average-stock-to-losing-to-it-chart-of-the-day-100000647.html?.tsrc=fin-notif)

9. News • yesterday The Dow, S&P 500, and Nasdaq rallied as Anthropic IPO buzz reignited the AI trade

10. News • yesterday Microsoft offered voluntary buyouts to about 60,000 employees Monday as it reshapes for the AI era.

11. [News • yesterday Five unexpected risk factors that Anthropic is worried about, plus other live updates. Follow along here.](https://finance.yahoo.com/technology/live/anthropic-ipo-live-updates-frontier-ai-lab-discloses-revenue-and-risks-in-highly-anticipated-s-1-filing-141702607.html?.tsrc=fin-notif) 12. News • yesterday The Dow, S&P 500, and Nasdaq gained as investors braced for a busy week

13. [Breaking News • yesterday Anthropic just filed for its IPO, setting up what could be a record-breaking debut. Here’s what comes next.](https://finance.yahoo.com/technology/article/anthropic-files-public-ipo-prospectus-131112764.html?.tsrc=fin-notif)

14. News • yesterday Anthropic plans to file for an IPO on Monday, setting up a potential record-breaking debut. (Bloomberg)

15. [News • yesterday The Federal Reserve's October rates decision and a ream of Mag 7 earnings will headline the busiest week of the quarter.](https://finance.yahoo.com/markets/article/google-microsoft-amazon-and-the-fed-step-up-to-a-skittish-market-what-to-watch-this-week-100000081.html?.tsrc=fin-notif)

16. News • 2 days ago Social Security says it updated millions of records to combat fraud. What it could mean for benefits.

17. News • 2 days ago Wall Street is starting to size up the potential of a combined SpaceX and Tesla

18. News • 2 days ago SpaceX, Meta, and other hyperscalers are dropping clues you should not ignore

19. [News • 2 days ago US prices have risen about half as fast in Trump's second term as under Biden, but voters are still just as mad](https://finance.yahoo.com/economy/policy/article/inflation-under-trump-is-only-about-half-the-rate-under-biden-voters-are-still-just-as-mad-120043933.html?.tsrc=fin-notif) 20. News • 2 days ago Meta’s new nonvoting shares could affect your stake. Here’s how 21. News • 3 days ago Volkswagen bets on Georgia for Audi production, a win for Trump

22. News • 3 days ago A few smart moves can help your donations, and your tax bill.

23. [News • 3 days ago California voters will decide whether to approve taxes on billionaires' wealth. Here's what you need to know.](https://finance.yahoo.com/personal-finance/taxes/article/californias-prop-40-what-to-know-about-the-billionaire-wealth-tax-202611704.html?.tsrc=fin-notif)

24. News • 3 days ago Apple's new hardware push is meeting AI-worried investors at the right moment 25. News • 3 days ago Saudi Arabia wants to pump 10M barrels of oil a day. Prices may barely budge, Fortune reports.

26. News • 3 days ago Americans have never had more of their money in stocks — not even in the dot-com bubble

27. [News • 3 days ago SpaceX wants Starlink Mobile to be a major carrier in the US. That could be costly and time-intensive, analysts say.](https://finance.yahoo.com/markets/stocks/article/its-not-something-that-gets-done-overnight-spacexs-telecom-ambitions-will-be-hard-won-ceos-and-analysts-say-120348084.html?.tsrc=fin-notif) 28. News • 4 days ago US will cut some Canada tariffs to boost GOP before midterms, WSJ reports.

29. [News • 4 days ago SpaceX wants to sell you a phone plan. While it's bad news for telecom giants, it's great for three stocks in particular.](https://finance.yahoo.com/markets/article/spacex-wants-to-be-americas-fourth-phone-carrier--tower-owners-are-cashing-in-162059593.html?.tsrc=fin-notif)

30. News • 4 days ago The iPhone Duo goes on sale Friday, but in-store supplies will be limited.

31. News • 4 days ago P&G just had its best day since 2020 as investors pile into the maker of Tide and Pampers. 32. News • 4 days ago Stocks were headed lower on Friday to cap a volatile week.

33. [News • 4 days ago Few private individuals have had as much influence over national security, diplomacy and the economy as Musk.](https://finance.yahoo.com/technology/article/how-elon-musk-went-from-tesla-ceo-to-the-most-powerful-civilian-non-governmental-actor-in-history-100000227.html?.tsrc=fin-notif) 34. News • 5 days ago Mortgage rates just dropped for the first time in months.

35. [News • 5 days ago A $2.7T chip sell-off is putting the floor under Tuesday’s bear trap to its third test. Here are the levels to watch.](https://finance.yahoo.com/markets/article/chip-stocks-break-a-bear-trap-after-a-26-trillion-rout--here-are-the-levels-bulls-need-to-hold-141026919.html?.tsrc=fin-notif) 36. News • 5 days ago Stocks declined as Big Tech led the AI trade lower on Thursday.

37. News • 5 days ago Stocks fell as oil prices surged and investors digested the latest earnings from Meta and Tesla.

38. [News • 5 days ago Tesla cut $5 billion from this year's spending plan. It also told investors the bill is going up from here.](https://finance.yahoo.com/markets/article/tesla-is-spending-less-now-but-the-bill-is-coming-later-chart-of-the-day-100000662.html?.tsrc=fin-notif)

39. News • 6 days ago Berkshire just trounced chip stocks and flashed a rare dot-com-era signal

40. News • 6 days ago Even top earners aren't immune to trends pushing Americans to rent for longer. 41. News • 6 days ago Investors assessed a batch of earnings on Wednesday as SpaceX shares surged.

42. News • 6 days ago Nvidia debuted new AI security and robotics features at GTC Berlin.

Older

43. Breaking News • Oct 20, 2026 SpaceX beats estimates; capex comes in lower than expected. Here are the highlights.

44. News • Oct 20, 2026 The Dow and S&P 500 rise, and Nasdaq slips as focus shifts to SpaceX, Netflix earnings 45. News • Oct 20, 2026 Chip stocks rebound, but more turbulence may be ahead

46. News • Oct 20, 2026 Goldman warns the US housing market is likely to stay under pressure in 2027.

47. News • Oct 20, 2026 AI data centers could add 42 times Doc Brown’s Back to the Future power next year.

48. News • Oct 20, 2026 The S&P 500 and Nasdaq pointed lower as the AI trade rebound stalled.

49. News • Oct 20, 2026 GM posted third quarter results before the bell that topped estimates.

50. News • Oct 19, 2026 Chip stocks recovered, but most stocks missed the comeback. Here's who led Monday's rally.

[](https://mail.yahoo.com/)

1. My Portfolio

2. Markets 1. Stocks 1. Most Active 2. Day Gainers 3. Day Losers 4. Trending 5. Highest Dividend 6. Large Cap 7. Small Cap 8. Most Expensive 9. Highest Beta 10. Pink Sheet 11. Unusual Volume

2. Crypto 1. Most Active 2. Day Gainers 3. Day Losers

3. Private Companies 1. 52 Week Gainers 2. Recently Funded 3. Most Funded

4. Options 1. Day Gainers 2. Day Losers 3. Highest Open Interest 4. Highest Implied Volatility

5. Sectors 1. Technology 2. Financial Services 3. Consumer Cyclical 4. Consumer Defensive 5. Communication Services 6. Healthcare 7. Industrials

6. Treasury Bonds 7. Currencies 8. World Indices 9. Commodities 10. ETFs 11. Mutual Funds

3. News 1. Markets 1. Stock Market News 2. Real Estate 3. Magnificent 7 4. Private Markets 5. Futures & Derivatives

2. Originals 3. Premium News 4. Newsletters 5. Economy & Policy 1. Earnings 2. Oil & Gas 3. Strait of Hormuz 4. Tariffs 5. Clean Energy

6. Tech 1. Aerospace & Defense 2. Enterprise Cloud

7. Exchange-Traded Funds

4. Research & Tools 1. Calendars 1. Earnings Calendar 2. IPO Calendar 3. Stock Splits 4. Economic Events

2. Screeners 1. Equities 2. Most Shorted 3. Most Active Penny Stocks 4. Analyst Strong Buy

3. Stock Comparison 4. Currency Converter 5. Advanced Charts 6. Community

8. Premium Research 9. AlphaSpace 10. Stock Picks 11. Investment Ideas 12. Research Reports

5. Personal Finance 1. My Money BETA 2. Credit Cards 1. Compare Credit Cards 2. Best 0% APR Cards 3. Best Balance Transfer 4. Best Cash Back Cards 5. Best Travel Cards

3. Banking 1. CD Rates 2. Best High-Yield Savings 3. Best Money Market 4. Best Free Checking 5. Best Online Banks

4. Mortgage 1. Best Mortgage Lenders 2. Best Mortgage Rates 3. Mortgage Refinance 4. Mortgage Calculator 5. Mortgage Affordability Calculator

5. Student Loans 1. Federal vs. Private 2. FAFSA Guide 3. Student Loan Assistance 4. Student Loan Forgiveness 5. Paying Off Student Loans

6. Personal Loans 1. Best Personal Loans 2. Get Approved 3. Best Lenders

7. Insurance 1. Find Car Insurance 2. Types of Car Insurance 3. Car Insurance Discounts 4. Find Life Insurance

8. Taxes 1. How to File 2. Refund Status 3. Tax Extension 4. Child Tax Credit

9. Investing 1. Investing Basics 2. Real Estate Investing 3. Retirement Basics

10. Calculators

6. Watch 1. Daily Shows 2. The 8:30 3. Sozzi Unleashed 4. The Daily Wolf 5. Market Hang 6. In the Loop

8. Weekly Shows 9. Built Different 10. How They Run 11. Power Players 12. The Big Idea 13. Trader Talk

15. ETF Report 16. FA Corner 17. More to Watch 1. Must-watch Interviews 2. Mag 7 3. Fed Watch

Network

AlphaSpace

Get Finance Plus

U.S. markets closed

US Markets

Europe Markets

Asia Markets

Cryptocurrencies

Rates

Commodities

Currencies

U.S. markets closed

S&P Futures

7,758.50

+0.25+0.00%

Dow Futures

52,579.00

0.00 0.00%

Nasdaq Futures

29,822.00

+10.00+0.03%

Russell 2000 Futures

2,827.10

-1.40-0.05%

10-Yr Bond

4.9930

+0.0070+0.14%

VIX

17.52

-0.87-4.73%

Gold

4,077.90

+3.30+0.08%

Bitcoin USD

80,642.65

+561.88+0.70%

Crude Oil Dec 26

100.47

+0.57+0.57%

US Private Equity

10,911.65

+21.85+0.20%

![Image 6: Reuters](https://www.reuters.com/ "Reuters")

In China, the AI bubble has already burst

- !Image 7: In China, the AI bubble has already burst

- !Image 8: In China, the AI bubble has already burst

- !Image 9: In China, the AI bubble has already burst

- !Image 10: In China, the AI bubble has already burst

- !Image 11: In China, the AI bubble has already burst

- !Image 12: In China, the AI bubble has already burst

- !Image 13: In China, the AI bubble has already burst

- !Image 14: In China, the AI bubble has already burst

- !Image 15: In China, the AI bubble has already burst

- !Image 16: In China, the AI bubble has already burst

- !Image 17: In China, the AI bubble has already burst

- !Image 18: In China, the AI bubble has already burst

- !Image 19: In China, the AI bubble has already burst

- !Image 20: In China, the AI bubble has already burst

- !Image 21: In China, the AI bubble has already burst

1 / 13

In China, the AI bubble has already burst

FILE PHOTO: Unitree G1 Humanoid Robots dance during an uveiling event to announce new services by GMO AI & Robotics Corporation (GMO AIR) in Tokyo, Japan, September 8, 2026. REUTERS/Issei Kato/ File Photo

Reuters

Tue, October 27, 2026 at 2:40 AM EDT 4 min read

Oct 26 (Reuters) - While global tech stocks teeter, in China they have already crashed as lofty valuations collapse under worries about AI demand and curbs on Chinese exports.

The meltdown, tanking the mainland STAR50 index of AI and semiconductor leaders by 40% in less than four months and vaporising some $480 billion in market value, is an ill omen ‌for wobbly world markets and a dampener on China's efforts at encouraging its savers into stocks to fund the AI boom.

It has also slammed the brakes on a rally running two ‌years, since economic stimulus promises sent shares soaring, and has stalled Beijing's push to break with a long boom-bust pattern and drive a "slow bull" market that delivers reliable performance. China's broad blue-chip index has dropped about 20% from highs made in June.

"The stock market later evolved into a speculative crazy bull," said Beijing-based fund manager Dong Baozhen. "And now we see the bubble bursting."

The reversal reflects a rally that ran to higher heights than markets in the West or elsewhere in Asia, and compares with a mere prick to US AI stocks, which have led a 6% drawdown in the Nasdaq from a record high scaled three weeks ago.

There has been no obvious selling trigger in China, although traders said high prices, tax bills and the threat of the US or other nations banning Chinese equipment in data centres all contributed.

With AI stocks running to 42% of China's market capitalisation and 57% of ‌turnover across mainland-listed A-shares and Hong Kong's H-shares, according to Goldman Sachs, ⁠few in a market dominated by small investors have escaped pain.

RETAIL FAVOURITES SLIDE

Shares in robot-maker Unitree, 8,000 times oversubscribed by retail buyers at listing, have halved since they started trading in August, and chipmaker CXMT has lost more than a quarter of its value in the past month.

Chipmakers MetaX Integrated Circuits and Moore Threads ⁠Technology, which leapt 700% and 400% respectively on their market debuts last year, have also halved in value since July.

Chen Wensheng, a small business owner and investor from China's southern Hainan, said he bought into the rally emboldened by what he felt was official support for the likes of Unitree, which counted state-backed funds as investors. But Chen and his friends are now nursing losses.

Frustration that an investment theme backed by Beijing has ended so badly has driven many investors into defensive assets and is likely to slow equity fundraising by tech firms.

Shares in optical parts makers Zhongji Innolight and Eoptolink Technology are down roughly 60% from highs in June and ‌July, in part as Washington moves towards banning the one-time darlings from supplying US data centres.

Story Continues

With the STAR50 index still at around 100 times trailing earnings, albeit down from a high of nearly 250, investors compare the Nasdaq 100's multiple of 30 and worry the selloff could get worse before it gets better.

"What's happening is now going to put a stop for many of the companies trying to get themselves listed," said Hong Hao, managing partner and chief investment officer at Lotus Asset Management in Hong Kong.

'ALL BUBBLES INEVITABLY BURST'

The frenzy and its fallout contrast with a push by authorities to improve returns and dampen volatility by cracking down on leverage and high-frequency trading. State-backed investors were sellers into rallies to keep gains in check.

China's market regulator, the China Securities Regulatory Commission, did not immediately reply to questions faxed by ‌Reuters last week.

CRSC Chairman Wu Qing met with market participants earlier this month to hear suggestions on improving capital markets, the regulator said on its website, and some in the investment community say the boom has been bad for the market's structure.

"Overemphasising the 'technology content' — that is, the weighting of tech companies by market value in major indexes — leads to a deviation, even a distortion, in capital behaviour," said Leo Wang, partner at Beijing-based Qianchuang Capital.

"This created a severe bubble in certain sectors ‌and a serious drain on others."

Some see value in the selloff, saying it is neither surprising nor detrimental to market reforms that are geared for the long term and have gained traction in driving up returns, particularly income, in recent years.

Although they have been sellers over the past three months, Asia funds in general are overweight on China, according to HSBC research.

Goldman Sachs has Innolight and CXMT among dozens of Chinese AI stocks on a revamped recommendation list it published earlier this month, and BNP Paribas Securities strategist William Bratton has said the market offers buying opportunities for ‌the careful.

Still, on the mainland many are looking at other sectors or for even lower valuations before they turn buyers.

"Just like all other Chinese manufacturers, (chipmakers and AI suppliers) will eventually end up in a price war," said fund manager Wang Zhuo, partner at Shanghai Zhuozhu Investment Management.

"There's no exception," he said. "All bubbles inevitably burst."

(Reporting by Reuters' Asia markets team. Additional reporting by Gregor Stuart Hunter in Singapore. Writing by Tom Westbrook. Editing by Kevin Buckland.)

View Comments (26)

Terms and Privacy Policy

Privacy Dashboard

More Info

- * *

Trending Tickers

- HOOD Robinhood Markets, Inc. Equity NMS

- STX Seagate Technology Holdings plc Equity NMS

- SKHY SK hynix Inc. Equity NMS

- BA The Boeing Company Equity NYQ

- SOFI SoFi Technologies, Inc. Equity NMS

- V Visa Inc. Equity NYQ

* Trending tickers

- HOOD Robinhood Markets, Inc. 94.56+1.72(+1.85%)

- STX Seagate Technology Holdings plc 667.85+23.64(+3.67%)

- SKHY SK hynix Inc. 145.36+2.74(+1.92%)

- BA The Boeing Company 168.18-20.13(-10.69%)

- SOFI SoFi Technologies, Inc. 16.40+1.94(+13.42%)

- Portfolios Portfolios Sign in to access your portfolio

* Top gainers

- HRI Herc Holdings Inc. 156.06+28.93(+22.76%)

- KNSA Kiniksa Pharmaceuticals International, plc 89.20+16.22(+22.23%)

- CHRN ChronoScale Holdings Corporation 17.49+2.86(+19.55%)

- USAR USA Rare Earth, Inc. 10.40+1.49(+16.72%)

- CTOS Custom Truck One Source, Inc. 10.51+1.50(+16.65%)

* Top losers

- XYL Xylem Inc. 92.86-15.38(-14.21%)

- BA The Boeing Company 168.18-20.13(-10.69%)

- UNF UniFirst Corporation 250.40-29.24(-10.46%)

- DK Delek US Holdings, Inc. 70.30-8.17(-10.41%)

- PARR Par Pacific Holdings, Inc. 74.53-8.64(-10.39%)

* Most active

- SOFI SoFi Technologies, Inc. 16.40+1.94(+13.42%)

- SPCX Space Exploration Technologies Corp. 148.58+1.68(+1.14%)

- NU Nu Holdings Ltd. 12.40-0.19(-1.51%)

- INTC Intel Corporation 93.74+3.27(+3.61%)

- NVDA NVIDIA Corporation 217.94+1.94(+0.90%)

* Top economic events * * * *

- Earnings events- [x] My earnings events - [x] Earnings events Upcoming OCT 28 APH Amphenol Corporation SAN Banco Santander, S.A. VRT Vertiv Holdings Co BSX Boston Scientific Corporation UMC United Microelectronics Corporation

More News

Terms and Privacy Policy

Privacy Dashboard

Ad Terms Feedback More Info

In China, the AI bubble has already burst

Trending Tickers

U.S. markets closed

In China, the AI bubble has already burst

In China, the AI bubble has already burst

Recommended Stories

Trending Tickers

More News