In China, the AI bubble has already burst — $480 billion gone

China's STAR50 index of AI and semiconductor leaders has fallen 40% in less than four months, wiping out about $480 billion in market value, as lofty valuations collapsed under worries about AI demand and curbs on Chinese exports. China's broad blue-chip index is down about 20% from its June highs.

The retail favorites fell hardest: robot-maker Unitree, 8,000 times oversubscribed by retail buyers at listing, has halved since it started trading in August, and chipmakers MetaX and Moore Threads — up 700% and 400% on their market debuts — have also halved since July. AI stocks ran to 42% of China's market capitalization, according to Goldman Sachs.

With the STAR50 still trading at around 100 times trailing earnings, against 30 for the Nasdaq 100, investors worry the selloff could get worse before it gets better. One fund manager's verdict: 'All bubbles inevitably burst.'