U.S.-listed Chinese stocks slid on Wednesday as investors grew increasingly wary of parallels to the country’s 2015 stock market bubble, when a liquidity-driven rally pushed valuations far beyond economic fundamentals.

Shares of Alibaba Group Holding Ltd. BABA, Baidu Inc. BIDU, JD.com Inc. JD, PDD Holdings Inc. PDD, and electric-vehicle makers NIO Inc. NIO, Li Auto Inc. LI, and XPeng Inc. XPEV all traded lower.

Concerns are mounting over a surge in leveraged trading and speculative bets on Chinese technology stocks. Margin financing has climbed to its highest level in a decade, while producer prices remain mired in nearly three years of deflation.

Also Read: TikTok Parent ByteDance Takes Aim At Alibaba, DeepSeek With New Open-Source AI Model

At the same time, enthusiasm surrounding artificial intelligence has fueled sharp gains in companies such as Cambricon Technologies and Hygon Information Technology, prompting questions over whether valuations can be sustained, Bloomberg reported.

Alibaba, seen as a bellwether for Chinese tech, will be in focus when it reports quarterly results on Friday. The company is expected to highlight its artificial intelligence ambitions, though, like Tencent Holdings Ltd. TCEHY and Baidu, it has yet to demonstrate meaningful financial returns on its multibillion-dollar AI investments.

Chinese internet firms have aggressively rolled out large language models and integrated them into flagship products over the past three years, but analysts note that monetization has proven elusive.

According to a Reuters report on Wednesday, Chinese consumers are resistant to paid subscriptions, which has significantly weighed on the adoption of subscription-based services.

Alibaba has aggressively showcased AI advancements, yet weak revenue contribution from these efforts weighs on its growth outlook. At the same time, its core e-commerce business faces fierce price competition amid China’s sluggish economy.

LSEG data shows Alibaba’s cloud business, which includes AI sales, likely grew 4.3% sequentially to 31.4 billion yuan ($4.4 billion) in the April-June quarter, up 18% year-over-year but showing slower growth momentum.

Tencent and Baidu reported similarly muted gains, with Baidu scrapping its Ernie chatbot subscription as it failed to gain traction.

To offset consumer reluctance, Chinese AI players are shifting their focus toward enterprise clients through application programming interface (API) services. But a fierce price war has emerged. In May, Alibaba slashed rates for its Qwen-Long API model by 97%, while rivals such as DeepSeek have intensified competition by open-sourcing their models.

Alibaba is forecast to report revenue of 252.9 billion Chinese yuan on Friday, a 4% increase from a year earlier. The company bets on AI as a long-term growth driver despite near-term challenges.

Meanwhile, global asset manager Bridgewater Associates has taken a decisive step away from Chinese equities. In its latest 13F filing, the hedge fund disclosed that it had fully liquidated positions in major U.S.-listed Chinese companies, including Alibaba, JD.com, PDD, and Baidu.

The move marks Bridgewater’s most significant strategic shift since Ray Dalio’s departure and underscores heightened caution over China’s geopolitical and regulatory outlook.

The divestment is part of a sweeping portfolio overhaul led by CEO Nir Bar Dea, as Bridgewater consolidated its bets into fewer, high-conviction positions.

Price Action: BABA stock is trading lower by 1.93% to $121.77 at last check Wednesday.

Read Next:

Image by Lightspring via Shutterstock