China AI Stocks Sink on Call for Beijing to Rein In Bubble Risk

(Bloomberg) — Chinese shares related to artificial intelligence tumbled after a state media outlet urged authorities to step up supervision of potential speculation.

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The ChatGPT concept sector has “signs of a valuation bubble,” with many companies having made little progress in developing the technology, the Economic Daily wrote in a commentary Monday.

Regulators should strengthen monitoring and crackdown on share-price manipulation and speculation to create “a well-disclosed and well-run market,” according to the newspaper, which runs a website officially recognized by Beijing. Companies, it said, should develop the capabilities they propose, while investors should refrain from speculating.

Following the report, CloudWalk Technology Co. tumbled as much as 19% from a record high, while 360 Security Technology Inc. dropped by 10%, the most in three years. Beijing Haitian Ruisheng Science Technology Ltd. lost as much as 14%.

Since the release of ChatGPT, Chinese shares related to the technology have surged, with domestic big techs joining the race to develop generative AI. SenseTime last Tuesday rose the most in two months in Hong Kong amid speculation that the SoftBank Group Corp.-backed company was developing a product to challenge ChatGPT. Shares of Alibaba suppliers also jumped on reports that the tech giant will unveil its answer to ChatGPT on April 11.