From early to mid-October 2026, A-share sectors related to AI underwent sustained adjustments: from September 22 to October 22, the ChiNext Index fell by 24.20%, the STAR 50 Index posted four consecutive weekly declines, and both the telecommunications and electronics sectors saw drops exceeding 20%. Yet during the same period, corporate earnings remained robust—CATL reported a quarterly net profit attributable to shareholders of RMB 21.246 billion, up 14.54% year over year; Yuanjie Technology forecast that its third-quarter net profit would surge by 578.85%–659.70% year over year; and Lianxun Instruments projected a 1,866%–2,073% increase in net profit for the first three quarters. This divergence between earnings and stock prices underscores that this round of correction is not targeting corporate performance but rather systematically slashing valuations.
Valuation compression is pronounced: As of October 16, the STAR 50 Index’s PE‑TTM has fallen nearly 60% from its June peak of around 264 times to above 110 times; the ChiNext Index’s PE‑TTM has dropped from 54 times to approximately 32 times, a 40% decline. The drivers include denominator-side pressures—such as the U.S. September CPI exceeding expectations, which has heightened rate-hike expectations and prompted a reevaluation of discount rates—and numerator-side concerns—like FCC新规 raising worries about the sustainability of overseas revenues. Nevertheless, industry‑level economic indicators remain positive: in August, global semiconductor sales rose 144.3% year over year, and China’s integrated circuit exports increased by 108.1% in the first three quarters.
A key divergence has emerged in the funding structure: trading-oriented investors are exiting as negative news and crowded‑trade levels rise, while allocation‑focused investors continue to add positions. According to Wind data, from September 28 to October 14, equity‑type ETFs recorded net inflows for eight consecutive trading days, totaling RMB 94.753 billion. Among them, the ChinaAMC CSI STAR 50 ETF saw net inflows of RMB 15.463 billion, with its share count increasing by 35.25% over the past month; its assets under management surpassed RMB 106 billion on October 21, making it a newly minted ETF with AUM exceeding RMB 100 billion. On October 24, five optical‑communication companies simultaneously announced robust order books—Zhongji Xuchuang’s orders are booked through 2027, and Xinyisheng is ramping up production of 1.6T modules—and the market staged a V‑shaped reversal in the afternoon, with the ChiNext Index surging 4.16% in a single day. Capital clearly flowed back from defensive sectors like banking into growth‑oriented areas.
The primary market and policy landscape are providing new anchors: DeepSeek has closed its second round of financing, raising approximately RMB 100 billion, with a pre-money valuation remaining steady at RMB 500 billion; industrial investors such as CATL and SMIC PolySource have increased their shareholdings. On October 16, the draft revision of the “Catalogue of Technologies Prohibited or Restricted from Export in China” was released for public comment, explicitly stating that automatic licensing applies to scenarios such as open-source technologies, localized deployments, and overseas self-owned cloud deployments, effectively exempting the open-source approach and bolstering policy certainty around domestic AI technology pathways. The peak period for Q3 earnings releases has become a key verification window—order visibility now extends through 2027, but whether gross margin trends and on-device AI will translate into sustained volume growth remains to be confirmed by subsequent financial reports.