China's AI Stock Bubble Bursts as STAR50 Falls 40%, Erasing $480 Billion in Value

China's AI and semiconductor stock rally has collapsed, with the STAR50 index of mainland technology leaders falling 40% in under four months and wiping out roughly $480 billion in market value, Reuters reported Oct. 26. The selloff marks a sharp reversal from a two-year rally and threatens Beijing's push to steer savers into equities. There was no single selling trigger, though traders cited stretched valuations, tax bills and the threat of foreign bans on Chinese data-center equipment. AI stocks had grown to 42% of China's market capitalization and 57% of turnover across A-shares and H-shares, according to Goldman Sachs, leaving few small investors unscathed. Retail favorites have slid sharply: robot-maker Unitree has halved since its August listing, chipmaker CXMT lost more than a quarter in a month, and MetaX and Moore Threads have each halved since July. Optical parts makers Zhongji Innolight and Eoptolink are down about 60% from summer highs. The STAR50 still trades near 100 times trailing earnings, down from a peak near 250, versus 30 for the Nasdaq 100.