A growing chorus of China’s most influential hedge fund managers is sounding the alarm on what they describe as a dangerously overheated global AI trade.
After an explosive run-up in semiconductor and model‑development stocks from Seoul to Silicon Valley, several of Beijing’s money managers now argue the rally has detached from fundamentals – and that the first cracks are already visible.
Veteran managers are now calling AI a super bubble
Two of China’s best‑known hedge funds – Wealspring Asset and Shanghai Banxia Investment Management – have issued unusually blunt warnings that the AI boom has entered bubble territory, said a Bloomberg report.
Wealspring, founded by Yang Dong, who famously called China’s 2007 market top, told investors that global AI equities now resemble a “super bubble” inflated by momentum rather than durable business models, Bloomberg reported, citing an investor letter.
The firm, which oversees more than $1.4 billion, said many Chinese AI infrastructure companies lack defensible moats and rely on relentless capital expenditure to maintain growth.
In its view, valuations have been pushed to extremes by “brainless buying,” echoing the speculative frenzy of China’s 2015 bull market.
Wealspring cautioned that some of the most popular domestic AI names could ultimately fall more than 80% once sentiment turns.
Concerns extend beyond China, with Anthropic in focus
Banxia – which manages about $294 million – argues that the warning signs are “not” confined to China’s onshore markets.
The firm points to slowing revenue momentum at Anthropic PBC, one of the most closely watched US AI startups, as evidence that the global narrative of unstoppable growth is beginning to fray.
Banxia believes Anthropic’s annualized revenue run‑rate may undershoot market expectations as enterprise clients balk at soaring token costs and as rival model developers intensify competition for developers.
The fund also highlights a broader risk: that the AI ecosystem’s blistering revenue assumptions are colliding with the reality of rising infrastructure costs and tightening corporate budgets.
For Banxia, these pressures represent the early stages of a sentiment shift that could ripple across global AI valuations.
A booming market – and the cost of staying cautious
Despite the warnings, AI stocks have delivered extraordinary gains in 2026. China’s CSI Artificial Intelligence Index is up more than 35% year‑to‑date, far outpacing the 5% increase in the country’s main benchmark.
Overseas, the rally has been even more dramatic: South Korea’s Kospi has surged nearly 100% this year, powered by SK Hynix and Samsung Electronics – both beneficiaries of unprecedented demand for high‑bandwidth memory used in AI data centers.
Yet the very funds urging caution have paid a short‑term price for staying on the sidelines.
Wealspring’s Zhiyuan fund and Banxia’s low‑volatility macro strategy have posted small losses in early 2026, even though both remain strongly profitable over longer horizons.
Banxia founder Li Bei insists the discipline is worth it, advising investors to resist the temptation to chase parabolic AI trades and to prepare for a potential correction that could reset valuations across the sector.
The post Why China's top money managers believe the AI bubble is about to pop appeared first on Invezz