The Chinese AI crash is not the end, but it is cheering
Some heartwarming news on Monday from Reuters: “In China, the AI bubble has already burst.” [Reuters] You know about the AI bubble in the US stock and venture capital markets. But there’s a separate AI bubble in the Chinese stock markets. We wrote in August about the humanoid robot companies like…
Annons
Annons
Some heartwarming news on Monday from Reuters: “In China, the AI bubble has already burst.” [Reuters] You know about the AI bubble in the US stock and venture capital markets. But there’s a separate AI bubble in the Chinese stock markets. We wrote in August about the humanoid robot companies like Unitree doing their own little bubble on the Shanghai and Hong Kong stock exchanges. There is no market for humanoid robots and they don’t work. But the companies keep trying to talk up a market in China and the US. This is the future! But in China, the retail mum-and-dad investors jumped in. They were sure this was the path to fortune. The government was even talking it up: Chen Wensheng, a small business owner and investor from China’s southern Hainan, said he bought into the rally emboldened by what he felt was official support for the likes of Unitree, which counted state-backed funds as investors. But Chen and his friends are now nursing losses. The STAR50 index of Chinese AI and semiconductor stocks had started picking up in April and it peaked in June. But the index has dropped about 40% since then. [Bloomberg, archive] Tech stocks have been rallying in China for the past couple of years. The Chinese stock market tends to be really bubbly. But the government was hoping to get a steadier market, not just a boom and bust cycle. Then the STAR50 started going through the roof. Beijing fund manager Dong Baozhen told Reuters: The stock market later evolved into a speculative crazy bull. And now we see the bubble bursting. Chinese companies mostly get their funding from selling stock. Borrowing with bonds as US companies do is a lot rarer. So if stocks stay down in a post-bubble slump, that’s going to affect a lot of companies — useful ones as well as humanoid robot weirdos. Leonid Mironov at Gavekal Capital told Bloomberg: If the weakness goes on for more than six months, this will make fundraising difficult and also imply that the market is unimpressed with the technological progress being achieved. Chinese AI companies are still trying. We got the Kimi K3 chatbot model as open weights as a promotional loss leader for Moonshot’s planned IPO in Hong Kong in the first quarter of 2027. [Bloomberg, archive] The Chinese government is trying to prop up the market by encouraging stock buybacks and making it harder to sell. I’m sure that’ll go great. [Bloomberg, archive] The US AI bubble will burst. Even if only a few people dare say the word “bubble” about AI being the bubbliest bubble that ever bubbled. But as fund manager Wang Zhuo told Reuters: There’s no exception. All bubbles inevitably burst. Video — Podcast It’s pledge week at Pivot to AI! Please put in your $5 to keep us going! It really helps!