China’s chip stock rally was one of the hottest trades of 2026. Now it’s cooling faster than a GPU in a Siberian mining facility.
A closely watched measure of investor sentiment on China’s technology hardware sector has dropped to its most bearish reading in over four years. The reversal comes after the STAR 50 Index, which is heavily weighted toward semiconductor companies, surged roughly 62-64% during Q2 2026, fueled by a wave of AI infrastructure spending and supportive domestic policy.
From euphoria to exhaustion
The CSI 300 blue-chip index hit a four-year high in May 2026, and chipmaker indexes reached all-time records around the same period.
Huawei projected a 60% jump in AI chip revenue for 2026, a figure that reflected genuine confidence in the sector’s growth trajectory. Investors piled in accordingly.
