Cambricon Technologies Corp. Ltd. plunged 11.90% in Shanghai trading Thursday morning, marking its steepest intraday decline since January.

Stock Faces Steepest Drop Since January 2025

The selloff hit China’s answer to Nvidia Corp. ( NVDA ) as investors booked profits following a meteoric August rally that more than doubled the stock’s value.

Trading at 1,237.83 CNY ($173.31), down 11.90%, Cambricon remains up 91.73% year-to-date despite Thursday’s retreat. The Beijing-based artificial intelligence chipmaker had surged over 125% in August alone while NVIDIA ( NVDA ) shares remained relatively flat.

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Index Weight Triggers Rebalancing Fears

The dramatic August rally lifted Cambricon’s weight in the tech-focused STAR50 Index to 15%, breaching the 10% cap for individual stocks. This has sparked concerns about mandatory rebalancing when the index resets on September 12, according to Reuters reporting.

Profit-taking extended beyond Cambricon, dragging semiconductor shares traded onshore nearly 6% lower and pulling the STAR50 Index down more than 5%. The broader tech selloff reflects investors’ caution ahead of the anticipated index adjustment.

Company Issues Risk Warning

Last week, Cambricon issued a risk warning to investors through a stock exchange filing, citing the sharp rise in its share price since late July. The warning aimed to curb speculative buying and cool market enthusiasm surrounding the stock.

The company delivered a 4,000% year-over-year surge in first-half revenue to $403.8 million, its strongest performance since going public in 2020.

China’s AI Rally Faces Cooling Measures

Tech and artificial intelligence stocks have driven China’s bull run this year, with the STAR50 Index rising 26% and AI shares gaining 47% year-to-date. However, risk sentiment was dampened by media reports that China is considering measures to cool its stock market amid concerns over the sharp rally since early August, according to Reuters.

The benchmark CSI300 Index gained 10% in the last month, prompting regulatory attention to the rapid price appreciation across Chinese technology sectors.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.