Chinese AI bubble crash

[Basman]

I will never financially recover from this.

Quote

While global tech stocks teeter, in China they have already crashed as lofty valuations collapse under worries about AI demand and curbs on Chinese exports.

The meltdown, tanking the mainland STAR50 index (.STAR50), opens new tab of AI and semiconductor leaders by 40% in less than four months and vaporising some $480 billion in market value, is an ill omen for wobbly world markets and a dampener on China's efforts ‌at encouraging its savers into stocks to fund the AI boom.

https://www.reuters.com/world/china/china-ai-bubble-has-already-burst-2026-10-26/

Watch the video attached to the linked article. 

Locking out Chinese AI products globally was probably a big cause in the dip

[Basman]

I can see AI companies trying to switch to providing hacking for the military such that they don't have to be profitable. AI is too expensive to run to be profitable. 

[Joshe]

First half of this year, Anthropic spent 8.95 billion on compute and generated 16.3 billion in revenue from that compute, and efficiency will increase, so it doesn’t seem too expensive to generate profit. What’s expensive is maintaining their position on the frontier. 

[Leo Gura]

20 minutes ago, Joshe said:

Anthropic spent 8.95 billion on compute

They lie! They count some of the compute cost as "marketing".

No way are they profitable.

[Basman]

28 minutes ago, Joshe said:

First half of this year, Anthropic spent 8.95 billion on compute and generated 16.3 billion in revenue from that compute, and efficiency will increase, so it doesn’t seem too expensive to generate profit. What’s expensive is maintaining their position on the frontier. 

Then why did the Chinese market lose 480 billion. Even when cut of from western markets, a profitable technology shouldn't lead to such a bloodbath. That graph is like an executioners axe.

Edited 2 hours ago by Basman

[Joshe]

1 hour ago, Leo Gura said:

They lie! They count some of the compute cost as "marketing".

How do you know they're lying? Don't be an epistemic pervert, lol. 

[Joshe]

1 hour ago, Basman said:

Then why did the Chinese market lose 480 billion. Even when cut of from western markets, a profitable technology shouldn't lead to such a bloodbath. That graph is like an executioners axe.

I'm no business/finance guy, but this seems to make sense: 

If these labs stopped research and training and only focused on extracting profits from what they've already built, they'd be profitable af. The main reason they aren't profitable is due to the arms race. I'm not sure how that arms race ends though. 

[Basman]

2 minutes ago, Joshe said:

If these labs stopped research and training and only focused on extracting profits from what they've already built, they'd be profitable af. The main reason they aren't profitable is due to the arms race. I'm not sure how that arms race ends though. 

Doubt it. Source?

If anything it seems to only become more expensive to run. People are increasingly using AI more, putting a greater load on their systems.