China AI stocks have suffered a sharp reversal, with the mainland STAR50 index of AI and semiconductor companies falling 40% in less than four months by October 27, 2026. The selloff has erased about $480 billion in market value and interrupted a two-year rally in Chinese shares.

Key Takeaways

  • China’s broad blue-chip index has fallen about 20% from its June highs.
  • Traders cited high prices, tax bills and possible restrictions on Chinese data-centre equipment, but identified no obvious single trigger for the selling.
  • Several prominent chipmakers and robotics companies have recorded steep share-price declines.

China AI stocks retreat after a prolonged rally

The decline follows a rally that began after Chinese economic stimulus promises helped lift shares. The reversal has also challenged Beijing’s goal of fostering a steadier stock market that could attract household savings.

Goldman Sachs estimates that AI stocks account for 42% of China’s market capitalisation and 57% of turnover across mainland-listed A-shares and Hong Kong-listed H-shares. That footprint means a decline in the sector can affect a broad range of investors.

Chipmakers and robotics shares among the losers

Shares in robot maker Unitree have halved since they began trading in August. Chipmaker CXMT has lost more than a quarter of its value in the past month, while MetaX Integrated Circuits and Moore Threads Technology have each halved in value since July.

Optical-parts makers Zhongji Innolight and Eoptolink Technology are down roughly 60% from their June and July highs, respectively. Washington has moved towards banning the companies from supplying US data centres.

Investors weigh valuations and fundraising

The STAR50 remains at about 100 times trailing earnings, down from a high of nearly 250. Traders pointed to elevated prices and tax bills, as well as the threat of US or other national bans on Chinese equipment in data centres, as factors in the selloff; there was no obvious single selling trigger.

Hong Hao, chief investment officer at Lotus Asset Management, said the downturn would halt listing plans for many companies. Some investors nevertheless see opportunities: Goldman Sachs included Innolight and CXMT on a revised list of recommended Chinese AI stocks earlier in October.

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