A growing number of Chinese hedge fund managers are warning that the global rally in artificial intelligence-related stocks has become detached from fundamentals, with some arguing the sector is approaching bubble conditions. according to a report by Bloomberg.
Among the most vocal is Shanghai-based Banxia Investment Management, which told investors that the catalyst for an AI correction may already have emerged, pointing to signs that revenue growth expectations for leading AI developers are beginning to moderate.
Separately, Wealspring Asset Management described AI equities as a “super bubble”, arguing that many companies exposed to AI infrastructure are being valued on aggressive growth assumptions despite lacking durable competitive advantages. The firm said a significant proportion of businesses across the AI supply chain remain heavily dependent on continuous capital investment to sustain expansion.
The warnings come as AI-linked stocks have delivered outsized gains across global markets, particularly semiconductor and memory names such as Micron Technology and SK Hynix, driven by expectations of sustained spending on data centres and AI infrastructure. However, some hedge fund managers are questioning whether those valuations adequately reflect execution risks and the industry’s long-term economics.
Banxia highlighted slowing momentum at AI model developer Anthropic as a potential early signal that investor expectations for hyperscaler AI monetisation may prove overly optimistic. The firm’s founder urged investors seeking AI exposure to exercise “very, very” high levels of caution.
While avoiding AI has proved costly in the short term, with AI indices continuing to outperform broader equity benchmarks this year, the comments illustrate a widening divide among institutional investors over whether current valuations can be supported by future cash flows. Several Chinese hedge funds have already adopted a more cautious stance on the sector, even as the broader market continues to favour AI-related assets.
The debate reflects broader concerns emerging across global markets, where investors are increasingly scrutinising whether unprecedented commitments to AI infrastructure, data centres and high-performance computing will generate sufficient returns to justify the industry’s rapidly rising capital intensity
