Shares of companies developing artificial intelligence in China fell under the influence of the state’s call to stop the risk of a bubble in this market, writes Bloomberg.

The country’s authorities are going to tighten controls on potential AI speculation, especially since a popular AI tool – ChatGPT chatbot, now owned by Microsoft – has all the hallmarks of a valuation bubble, as many rival companies didn’t make much progress in developing the technology.

Regulators should step up oversight and crack down on stock price manipulation and speculation. Companies should develop the opportunities they offer, and investors should refrain from speculation.

Shares of CloudWalk Technology Co Ltd (SS:688327) are down 20% and shares of 360 Security Technology Inc (SS:601360) are down 10%, the lowest in 3 years. Beijing Haitian Ruisheng Science Technology Ltd (SS:688787) shares fell 15%.

Since the launch of ChatGPT, Chinese stocks related to the field have surged, and major tech companies have entered the race to develop generative AI. Shares of SenseTime Group Inc. rose on the Hong Kong stock exchange last Tuesday to a 2-month high amid rumors that the company, backed by Japan’s SoftBank Group Corp. (TYO:9984), is developing a product that will challenge ChatGPT. Shares of Alibaba (NYSE:BABA) vendors also jumped after reports that the tech giant would introduce its answer to ChatGPT.

The government is concerned that many tech companies will launch their own versions of AI in the coming months, and while their valuations may rise, the actual financial impact on these companies may be difficult to assess, which could ultimately lead to disappointment and losses.

We previously reported that the owners of TikTok are reporting record profits.