Two of China's most prominent hedge fund managers are sounding alarms about the sustainability of the global artificial intelligence stock rally, with one predicting that the hottest domestic AI shares could fall more than 80%. The warnings come as AI-linked equities like SK Hynix and Micron Technology have more than tripled in value this year, raising questions about whether valuations have outrun underlying business fundamentals.
Bubble Calls From Experienced Hands
Wealspring Asset, a Shanghai-based manager overseeing more than $1.4 billion, is at the forefront of the skeptics. Its founder Yang Dong built a reputation in China for calling the market top in 2007, lending his current warnings added weight among domestic investors. The firm's latest investor letter, seen by Bloomberg, describes global AI stocks as a "super bubble" and states that the "collapse point may not be far away."
Wealspring's critique goes beyond valuation multiples. The firm argues that many Chinese AI infrastructure companies lack durable competitive advantages, operate ordinary business models dressed up in AI branding, and require unrelenting capital expenditure simply to sustain growth. Drawing a historical parallel, the fund compared the current environment to China's frothy 2015 bull market, where momentum-chasing — what traders then called "brainless buying" — ultimately ended badly for latecomers.
Anthropic as a Canary
Shanghai Banxia Investment Management Center, which manages roughly $294 million, takes a more specific view of where the first cracks are appearing. Rather than pointing to Chinese equities, Banxia's investor letter focuses on US AI darling Anthropic, arguing that "the trigger for the AI bubble to burst has already appeared." The fund predicts that Anthropic's closely watched annualized revenue run-rate will miss market expectations — a significant claim given that bulls have used that metric to justify elevated valuations across the entire AI ecosystem.
Banxia identifies two compounding pressures on Anthropic specifically. Large enterprise clients are growing increasingly sensitive to the rising cost of tokens, making them likely to pull back on consumption. At the same time, competing AI coding and developer tools are eroding Anthropic's stronghold among software engineers, who have been among the company's most loyal and high-volume users.
Broader Skepticism Within Chinese Funds
The bearish tone is not confined to these two managers. A monthly summary of fund views compiled by CSC Financial Co. and reviewed by Bloomberg found that at least four additional Chinese hedge funds expressed reluctance toward AI exposure in May. Of the fifteen funds surveyed, only four took a clearly positive stance, seven offered no view, and the remainder leaned cautious or negative. The distribution suggests a meaningful divergence of opinion among sophisticated allocators who have watched the rally from close range.
This internal debate matters because Chinese institutional investors are increasingly active participants in both domestic A-share markets and globally listed technology names. Their positioning and sentiment can move markets, particularly in Hong Kong-listed technology stocks that bridge onshore Chinese capital and international liquidity.
What the Bulls Are Missing
The core of Wealspring's argument is structural rather than cyclical. AI infrastructure spending — on chips, data centers, and networking — is being justified by demand projections that the firm believes are disconnected from the actual monetization timelines of AI applications. The comparison to 2015 is instructive: that bubble was also driven by a real technological shift (mobile internet and fintech), but the speed of capital allocation overwhelmed the pace at which companies could translate investment into durable earnings.
The parallel raises an uncomfortable question for investors globally: even if AI ultimately proves transformative, the gap between long-run potential and near-term cash flow generation may be wide enough to inflict severe losses on those who bought at peak enthusiasm. Wealspring's warning that some shares could drop more than 80% is not a prediction of AI's irrelevance — it is a reminder that timing and valuation discipline matter regardless of the quality of the underlying technology.
Investor Takeaway
For regional investors in Asia, including those allocating to Vietnam's capital markets where technology-sector sentiment increasingly echoes global trends, the signal from Chinese hedge funds deserves attention. A sharp correction in global AI equities would tighten risk appetite, weigh on emerging market inflows, and raise the cost of capital for domestic tech-linked plays. Investors with concentrated exposure to AI-adjacent positions may want to stress-test portfolio assumptions against a scenario where the most hyped names give back a substantial portion of recent gains.
