Chinese AI Hardware Stocks Suffer Worst Quarter Despite Strong Earnings

The STAR Market 50 (科創50) and ChiNext (創業板指) indices fell by 30.70% and 27.80% respectively in the third quarter, marking their worst quarterly performance. Despite a 437.6% year-over-year net profit growth for STAR Market companies in the first half of the year, investors shifted focus from valuation expansion to earnings verification. Market sentiment was further pressured by high U.S. interest rates and potential U.S. restrictions on Chinese optical communication modules. Meanwhile, capital rotated toward stable sectors like banking, while memory chip manufacturer CXMT (長鑫科技) emerged as the largest company by market capitalization in the A-share market.