China's AI Market Lost $480 Billion Amid Record Industry Spending

The Chinese stock market for companies related to artificial intelligence has lost about $480 billion in capitalization in less than four months. According to Reuters on October 26, 2026, the STAR 50 index has decreased by 40% from its July peak. The correction is occurring amid the ongoing growth of global investments in AI, but the financial results of the industry's largest players are increasingly diverging.

Among the hardest hit were semiconductor manufacturers MetaX Integrated Circuits and Moore Threads Technology. After a sharp rise in stock prices following their listings in 2025, their shares have lost about half of their value compared to summer highs.

Market participants primarily cite high company valuations and concerns about future demand for AI equipment as reasons for the decline. Even after the correction, the STAR 50 index was trading at a P/E ratio of about 100, reflecting the ratio of stock price to annual earnings. For comparison, the American Nasdaq 100 had a figure of around 30.

According to Hong Hao, managing partner at Lotus Asset Management, the market decline may hinder new public offerings of technology companies.

Memory manufacturers maintain high profits

Amid the Chinese correction, South Korean SK Hynix, one of the largest suppliers of high-speed HBM memory for AI accelerators, reported record quarterly results.

The company's revenue for the third quarter of 2026 reached 104.6 trillion won (about $78.1 billion), an increase of 32% compared to the previous quarter. Operating profit amounted to 83.3 trillion won (about $62.1 billion), with an operating margin of 80%.

The growth in demand for semiconductors is also reflected in South Korea's economy. According to the country's Ministry of Trade, exports in October increased by 93.7% to $115.28 billion. Semiconductor shipments rose by 259.4% to $56.44 billion. Partly, such high rates are explained by differences in the number of working days compared to last year.

AI developers face rising costs

American technology companies are showing another side of the investment boom. Alphabet, Google's parent company, increased its revenue by 25% to $127.6 billion in the third quarter, but did not meet analysts' expectations. After the report was published, its shares fell by 12.3%.

A complex cost structure is also characteristic of Anthropic, the developer of AI models Claude. According to updated documents for the initial public offering (IPO) on November 2, the company's revenue in the third quarter reached $16.96 billion, an increase of 47% for the quarter. However, Anthropic recorded an operating loss of $567 million after a profit of $974 million in the previous quarter.

Additional risks remain in long-term commitments for computing infrastructure. In the documents, Anthropic disclosed contracts for capacity procurement and leasing totaling about $895.4 billion, calculated over several years.

Differences in companies' financial results show that high demand for AI does not yet provide equal profitability for all industry participants. Equipment manufacturers receive revenue from current orders, while model developers and large technology companies continue to invest in infrastructure, the payback of which depends on further growth in demand for AI services.