China’s tech hardware shares slide as valuation worries mount
The STAR 50 Index fell as much as 4.6% on October 9, extending a two-day drop of more than 9% as doubts over the global AI trade deepen
China’s tech hardware rally is having a rough autumn. On October 9, 2026, the STAR 50 Index dropped as much as 4.6%, extending a selloff that pushed its two-day decline past 9%.
That marks the steepest slide since July. The stocks taking the most damage are tied to artificial intelligence and semiconductors, which were this year’s favorite trade.
The worry is simple. Investors are questioning whether global AI demand and spending can keep up with the prices they paid for these companies.
A rally that ran ahead of itself
To understand the fall, start with the climb. From April to July 2026, China’s tech sector gained more than 70%.
Then the momentum broke. By late June, the STAR 50 and ChiNext had both hit their peaks, and over the third quarter each fell around 30% from those highs.
By late September, after third-quarter earnings came in, the sector had recorded its worst quarterly performance on record.
AI, tech, and the markets they move—in one daily briefing.
Daily. Free. Join 34,000+ readers across crypto, finance, and policy.
Some of the year’s biggest AI names fared worse than the indexes. Biwin Storage Technology and Moore Threads Technology each dropped at least 40% in the quarter ending September 2026.
Why the selling picked up again this week
Several pressures are landing at once. Investors have been rotating toward defensive sectors, global yields have moved higher, and geopolitical tensions resurfaced after the holiday break.
The weakness is not confined to tech. Broader Chinese benchmarks, including the CSI 300 and the Shanghai Composite, approached one-year lows on October 8 and 9, as money shifted into cyclical names.
The reversal has been linked to excessive optimism in the first half of the year around investments in “hard tech,” the label used for companies building physical technology like chips and computing hardware. Concerns over competition and US export controls have also weighed on the trade.
Still expensive, even after the drop
The awkward part for bargain hunters is that the correction has not made these stocks cheap. The STAR 50 still trades at around 100 times forward earnings, well above global semiconductor benchmarks.
A 30% drop from the peak sounds like a lot of air let out. But when the starting point was a 70%-plus run, a large chunk of the gains is still baked in.