China AI Stocks Lose $480 Billion

Chinese AI and semiconductor stocks plunged, wiping out $480 billion in market value in less than 4 months. Reuters reported on the 26th that Chinese AI companies’ share-price declines showed an AI bubble beginning to deflate. The Shanghai technology index STAR 50 fell more than 40% from its July peak, while the CSI 300 dropped about 20% from its June peak. Questions about AI profitability, price competition and the possibility of US export restrictions were cited as factors weighing on investor sentiment.

The declines continued on the 27th, when the STAR 50 fell 4.8% in a day to its lowest level since March. The semiconductor sector index lost 5.8%, the AI sector index fell about 4%, and the Shanghai Composite dropped 1.3% to a 14-month low. Chinese technology stocks fell further even as AI investment sentiment partly recovered in the United States and other Asian markets. Bloomberg data showed that MiniMax and Z.ai, listed in Hong Kong in January this year, had lost a combined $150 billion from their respective market-cap peaks.

MiniMax shares rose to 1,330 Hong Kong dollars on March 18, then fell to 160.70 Hong Kong dollars on the 22nd, below their IPO price. That was a decline of about 88% from the peak. Z.ai also closed at 460.80 Hong Kong dollars on the 22nd. Both companies were seen early after listing as leading Chinese generative AI firms, but investors are questioning whether they can earn enough to justify their high valuations. Chinese companies are cutting API fees per token to attract users, while OpenAI and Anthropic have also lowered prices, weakening the advantage of low-cost competitors. MiniMax and Z.ai have yet to turn a profit, and JPMorgan expects AI model and application companies to become profitable around 2028.

The possibility of IPOs by DeepSeek and Moonshot AI was also cited as a burden on already-listed companies. Their listing schedules are not set, but analysts say IPOs could spread funds seeking AI exposure across more stocks and weaken MiniMax and Z.ai’s scarcity value. Other related shares also fell. Humanoid robot maker Unitree’s stock has halved since its August listing, while CXMT fell more than 25% over the past month. Moore Threads and MetaX shares surged 400% and 700%, respectively, when they listed last year, but their valuations have fallen to about half since July. Zhongji Innolight and Eoptolink, suppliers of optical components for AI data centers, also fell about 60% from their peaks after possible US restrictions on Chinese-made equipment were raised.

The STAR 50’s price-to-earnings ratio based on the past 12 months of results fell from about 250 times at its peak to around 100 times, but remained above the Nasdaq 100’s roughly 30 times. Analysts said further declines were possible if results fell short of market expectations. Goldman Sachs said AI-related stocks account for 42% of market capitalization and 57% of trading value among mainland Chinese and Hong Kong-listed companies. Individual investors who bought related shares also reportedly suffered heavy losses, as the Chinese government supports AI and semiconductors as strategic industries.

The declines continued despite government measures to stabilize markets. The CSI 300 rebounded 1.7% on the 23rd amid speculation that state funds might buy ETFs, but selling in technology stocks then intensified. On the 26th, the People’s Bank of China said it would introduce a swap facility to provide emergency liquidity to non-bank financial institutions facing large-scale redemptions, but it did not stop the market fall on the 27th. Hong Hao, CIO of Hong Kong’s Lotus Asset Management, said the plunge could make new listings and fundraising more difficult for technology companies. Wang Zhuo, a partner at Shanghai Zhuozhu Investment Management, said AI chip and equipment makers would face price competition like other manufacturers.

Chinese AI and semiconductor stocks plunged, wiping out $480 billion in market value in less than 4 months. Reuters reported on the 26th that Chinese AI companies’ share-price declines showed an AI bubble beginning to deflate. The Shanghai technology index STAR 50 fell more than 40% from its July peak, while the CSI 300 dropped about 20% from its June peak. Questions about AI profitability, price competition and the possibility of US export restrictions were cited as factors weighing on investor sentiment.

The declines continued on the 27th, when the STAR 50 fell 4.8% in a day to its lowest level since March. The semiconductor sector index lost 5.8%, the AI sector index fell about 4%, and the Shanghai Composite dropped 1.3% to a 14-month low. Chinese technology stocks fell further even as AI investment sentiment partly recovered in the United States and other Asian markets. Bloomberg data showed that MiniMax and Z.ai, listed in Hong Kong in January this year, had lost a combined $150 billion from their respective market-cap peaks.

MiniMax shares rose to 1,330 Hong Kong dollars on March 18, then fell to 160.70 Hong Kong dollars on the 22nd, below their IPO price. That was a decline of about 88% from the peak. Z.ai also closed at 460.80 Hong Kong dollars on the 22nd. Both companies were seen early after listing as leading Chinese generative AI firms, but investors are questioning whether they can earn enough to justify their high valuations. Chinese companies are cutting API fees per token to attract users, while OpenAI and Anthropic have also lowered prices, weakening the advantage of low-cost competitors. MiniMax and Z.ai have yet to turn a profit, and JPMorgan expects AI model and application companies to become profitable around 2028.

The possibility of IPOs by DeepSeek and Moonshot AI was also cited as a burden on already-listed companies. Their listing schedules are not set, but analysts say IPOs could spread funds seeking AI exposure across more stocks and weaken MiniMax and Z.ai’s scarcity value. Other related shares also fell. Humanoid robot maker Unitree’s stock has halved since its August listing, while CXMT fell more than 25% over the past month. Moore Threads and MetaX shares surged 400% and 700%, respectively, when they listed last year, but their valuations have fallen to about half since July. Zhongji Innolight and Eoptolink, suppliers of optical components for AI data centers, also fell about 60% from their peaks after possible US restrictions on Chinese-made equipment were raised.

The STAR 50’s price-to-earnings ratio based on the past 12 months of results fell from about 250 times at its peak to around 100 times, but remained above the Nasdaq 100’s roughly 30 times. Analysts said further declines were possible if results fell short of market expectations. Goldman Sachs said AI-related stocks account for 42% of market capitalization and 57% of trading value among mainland Chinese and Hong Kong-listed companies. Individual investors who bought related shares also reportedly suffered heavy losses, as the Chinese government supports AI and semiconductors as strategic industries.

The declines continued despite government measures to stabilize markets. The CSI 300 rebounded 1.7% on the 23rd amid speculation that state funds might buy ETFs, but selling in technology stocks then intensified. On the 26th, the People’s Bank of China said it would introduce a swap facility to provide emergency liquidity to non-bank financial institutions facing large-scale redemptions, but it did not stop the market fall on the 27th. Hong Hao, CIO of Hong Kong’s Lotus Asset Management, said the plunge could make new listings and fundraising more difficult for technology companies. Wang Zhuo, a partner at Shanghai Zhuozhu Investment Management, said AI chip and equipment makers would face price competition like other manufacturers.