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—and the warning could send tremors through AI-linked crypto projects.
Wealspring Asset and Shanghai Banxia Investment Management, two of China’s best-known hedge funds, have issued unusually blunt warnings that the AI boom has entered bubble territory, according to 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. The firm, which oversees more than $1.4 billion, cautioned that many Chinese AI infrastructure companies lack defensible moats and could fall more than 80% once sentiment turns.
Banxia, managing about $294 million, points to slowing revenue momentum at US AI startup Anthropic PBC as evidence that the global narrative of unstoppable growth is fraying. It believes Anthropic’s annualized revenue run-rate may undershoot market expectations as enterprise clients balk at soaring token costs and competition intensifies. The fund also highlights a broader risk: blistering AI revenue assumptions are colliding with rising infrastructure costs and tightening corporate budgets.
Simultaneously, market data suggests the financial burden of AI is outweighing immediate rewards. Hyperscalers’ free cash flow has fallen to record lows as they pour billions into data centers and advanced chips. Retail investors have continued to pump record capital into chip ETFs even as valuations for semiconductor stocks hover near historic extremes. SK Hynix and Samsung Electronics have been beneficiaries, with South Korea’s Kospi surging nearly 100% this year on AI-driven demand for high-bandwidth memory.
Despite the warnings, AI stocks have delivered stellar returns in 2026—China’s CSI Artificial Intelligence Index is up more than 35% year-to-date. Yet Wealspring’s Zhiyuan fund and Banxia’s low-volatility macro strategy have posted small losses early this year, a short-term price of staying cautious. Banxia founder Li Bei insists discipline is worth it, advising investors to prepare for a potential correction that could reset valuations across the sector—including crypto projects tied to the AI narrative.
