China Stock Market Drops $2.4 Trillion Amid AI Doubts

Stocks on mainland China have lost approximately $2.4 trillion in market value since May, according to Decrypt, driven by mounting investor skepticism over whether artificial intelligence companies can generate sustainable profits. U.S. export restrictions and elevated U.S. interest rates have added further downward pressure on risk assets globally.

AI companies currently comprise 42% of the market value of Chinese shares listed on the mainland and in Hong Kong, and account for 57% of trading volume, according to data from Goldman Sachs. Consequently, a downturn in AI stocks has dragged down the broader market, pushing the CSI 300 index of the 300 biggest listed companies into a bear market on October 22 after falling at least 20% from its peak.

Tech Sector Hit Hard

The sharpest declines occurred in Shanghai's STAR 50 index, which tracks 50 large technology and chip companies. The index plummeted 40% in less than four months, erasing roughly $480 billion in value. Despite the drop, the index trades at approximately 100 times earnings, down from a peak of nearly 250.

Regulatory actions have also reshaped the landscape. Following releases of advanced chatbots by domestic startups like DeepSeek and Moonshot AI, Beijing urged technology giants including ByteDance and Alibaba to halt purchases of Nvidia chips in September 2025. Meanwhile, U.S. authorities have moved to restrict foreign-made humanoid robots and data center parts.

Key facts

• Mainland Chinese stocks lost about $2.4 trillion in market value since May.
• The STAR 50 index fell 40% in under four months, erasing roughly $480 billion.
• AI companies make up 42% of Chinese share market value and 57% of trading.
• The CSI 300 index entered a bear market on October 22.