--- title: "It Appears That the AI Bubble Has Just Burst in China" description: "Media reports argue that the AI bubble in China is already bursting, with AI stocks losing nearly half a trillion in the past few months." date: "2026-10-27" modified: "2026-10-27" authors: - name: "Frank Landymore" job_title: "Contributing Writer" link: "https://futurism.com/authors/flandymore.md" url: "https://futurism.com/artificial-intelligence/ai-bubble-burst-china" categories: - "Artificial Intelligence" - "Finance" - "Future Society" --- # It Appears That the AI Bubble Has Just Burst in China ![A finger popping a soap bubble.]() *Shutterstock / Futurism* As economists in the rest of the world look at the billions being poured into the AI industry with their hands over their eyes, the fate of China's AI industry may be a sign of things to come. A report [from *Reuters*]() suggests that the AI bubble in China "has already burst." Or it might be more apt to say that it shriveled like a rapidly deflating balloon: over the past four months, *Reuters* notes, the country's STAR50 index of AI and semiconductor companies collapsed by 40 percent, wiping out $480 billion in market value. That is not a typo. "The stock market later evolved into a speculative crazy bull," Beijing-based fund manager Dong Baozhen told *Reuters*. "And now we see the bubble bursting." Shares of Unitree, China's [buzzy robotics company](), have halved since the company went public in a much-hyped IPO in August, the reporting noted. The chipmaker CXMT, meanwhile, has lost more than a quarter of its value over the past month. The vicissitudes of the stock market haven't completely dampened AI investors' spirits, though. DeepSeek, one of China's top AI companies, recently raised $15 billion in one of the largest funding rounds in the country's history, [*Bloomberg* reported](). The outlet [also noted]() that Huawei clinched a $2.3 billion loan from Chinese banks to spend on more AI chips. The conditions in China, of course, are different than elsewhere in the world. China faces constant efforts from the US to ice it out of global competition, with tariffs and the US considering an outright ban on Chinese companies supplying equipment to data centers, such as Zhongji Innolight, whose optical transceivers are critical for facilitating the light-speed transfers of the epic amounts of data that AI requires. It's worth noting that the role of the economic hostility by the US and other western countries in the Chinese market downturn could be being understated, with the downturn as much a consequence of China [being blocked from selling its AI products overseas]() as much as it is of market arrogance. Still, the scale of money being poured into AI and AI-related industries — with AI stocks taking up some 42 percent of China's market capitalization, according to Goldman Sachs — isn't too dissimilar to what's happening in Western economies, where the obvious lack of a return of investment becomes harder to ignore. Anthropic's recent disclosure in its IPO filing of [a staggering $80 billion loss]() — and plans to [spend another $1 trillion]() on data centers over the next decade — will only further fuel fears that even the industry's top players are still far from being profitable. According to *Reuters*, state-backed investors sold into market rallies, or periods of rapid gains, to keep those gains in check, as part of a push by the government to dampen volatility. However intentioned that tactic may have been, it couldn't dress up the fact that the demand for AI products just isn't there yet. **More on AI:** [*New Analysis Finds Signs the AI Bubble Is About to Blow*]() ## Author At Futurism, my work has often centered on bringing a sense of clarity and insight to complex topics ranging from the regulation of emerging technologies to the esoteric ideologies of Silicon Valley executives, while striving not to lose the poetic sense of awe inspired by often-obscure fields like astrophysics and quantum computing. I broke the story of CNET using AI to produce articles that turned out to be riddled with factual errors and plagiarism — a dam-breaking inflection point, as I've reported, that's inspired copycats and endless discourse while beguiling stakeholders ranging from tech giants to purveyors of spam around the web. My work at Futurism has been cited by publications including CBS News, the Los Angeles Times, Vice, Gizmodo, Engadget, the Verge, and Vanity Fair. I grew up in locales ranging from India to China, and now live in the exotic suburbs of Virginia. In my free time, I'm an avid reader of weird sci-fi literature, an aficionado of East Asian cinema, and, regrettably, a relapsed gamer. Allegedly, I’m working on a debut novel, currently untitled. ### Author social links [Bluesky]() ## More - [The AI Bubble Is Bursting, Experts Say]() - [Mainstream News Anchors Now Talking About the AI Bubble Bursting at Any Moment]() - [Investors Concerned AI Bubble Is Finally Popping]() - [The AI Bubble Bursting Would Actually Be Incredible for the Economy, Economist Says]() - [IMF Warns That AI Bubble Could Take Down the Entire World Economy]() - [Expert on Financial Bubbles Weighs in on AI Industry]() - [Alarms Blaring That AI Bubble Could Collapse]() - [The Big Short Guy Just Bet $1 Billion That the AI Bubble Pops]()