China's tech rally has hit a wall. A key index of Shanghai's biggest technology companies has plunged more than 40% from its July peak as investors question whether heavy AI spending can ever earn enough to justify lofty valuations. What began as profit taking has become a broader reckoning over earnings. Troubles reach beyond technology, with a lingering property downturn denting household confidence and weak consumption weighing on internet platforms. Still, valuations are now near multiyear lows and international investors are lightly positioned, which strategists say may limit further downside. Some see the selloff as an opportunity, though a lasting rebound would likely need stabilizing earnings, clearer returns on AI investment and stronger domestic demand. For China tech, the question is no longer how fast companies can grow but whether that growth turns into sustainable profit. 

Finsum: Cheap valuations can start a conversation but cannot finish one, and investors eyeing Chinese tech should wait for evidence that growth is turning into profit before treating a selloff as a bargain.