A measure of investor sentiment on China technology hardware is flashing its most bearish reading in over four years as the red-hot rally in chip stocks rapidly cools. The gauge, tracked by Bloomberg, shows fear among investors has surged to levels not seen since 2020, reflecting a sharp reversal in momentum for the sector.

The pullback follows a period of intense speculation that drove valuations to elevated levels. Analysts note that the sudden shift in investor sentiment underscores the fragility of the rally, which was fueled by policy support and AI-driven demand expectations. Market participants are now reassessing growth prospects amid macroeconomic headwinds and regulatory uncertainty.

Trading volumes have thinned as buyers retreat, and technical indicators suggest further downside risk. The bearish signal may prompt a broader reallocation away from Chinese semiconductor names, potentially impacting global supply chain sentiment. Investors are watching for policy cues that could stabilize the market.