China’s AI Bubble Bursts: $480 Billion Vanishes as Profitability Fails to Match Valuations
China’s technology sector has suffered a severe correction, with the STAR 50 Index dropping over 40% from its July peak and erasing approximately $480 billion in market value. While the initial decline began as profit-taking, it has evolved into a fundamental reassessment of whether AI spending can generate sustainable profits. Battery giant CATL illustrates this disconnect, posting 59% revenue growth but only 15% profit growth. Analysts note that while valuations are now at multi-year lows, a sustained rebound requires clearer earnings trajectories and stronger domestic consumption, which remains hindered by a prolonged property downturn.