China's AI stock rally collapses, wiping $480 billion as STAR50 index falls 40%

China's AI stock rally collapsed this week, with the STAR50 index of AI and chip companies falling 40% from its July high and wiping approximately $480 billion in market value. The broader CSI 300 index entered a bear market. While US AI stocks have taken a smaller hit, with the Nasdaq about 6% below its recent record, this week's Big Tech earnings from Microsoft, Alphabet and Amazon will test whether the valuation gap between China and the US can hold. Analysts point to stretched prices and regulatory risks as contributing factors.