China: STAR50 IA Index lost 40% in less than four months, or $480 billion stolen

China's AI and semiconductor champions, who traded up to 250 times their profits, have seen their price melt since the summer. Unitee, MetaX and Moore Threads were split by two.

In China, the stock market euphoria around artificial intelligence has already reversed. According to a Reuters analysis, the STAR50, the index that includes China's leading AI and chip companies, has fallen by about 40% in less than four months, wiping out nearly $480 billion in capitalization. The major index of blue-chip stocks has also fallen by about 20% since its June highs.

Spectacular IPOs, then the fall

Several stars of the stock market have seen their value halved: robot maker Unitree, whose IPO in August was oversubscribed 8,000 times, as well as graphics chip designers MetaX and Moore Threads since July. Optical components specialists Zhongji Innolight and Eoptolink have fallen about 60% from their highs, and memory maker CXMT has lost more than a quarter of its value in a month.

Even after this correction, the STAR50 is still trading at about 100 times past earnings, compared to nearly 250 at its peak and about 30 for the Nasdaq 100. The sector's weight remains considerable: AI-related stocks account for 42% of China's market capitalization and, according to Goldman Sachs, 57% of trade. Investors cite excessive valuations, tax concerns, the threat of U.S. restrictions on data center equipment, and doubts about actual demand.