Chinese technology stocks experienced a significant decline, with the Hang Seng Tech Index falling by as much as 3.8% due to Xiaomi Corp’s $5.5 billion share sale causing a negative impact on market sentiment. The market has been volatile as investors search for new catalysts for continued growth. Although Chinese tech companies generally reported strong earnings during the recent earnings season, sustaining momentum has become more challenging as the Hang Seng Tech Index nears its three-year valuation average. While Asian markets rallied following indications from US President Donald Trump regarding potential tariffs, Chinese tech stocks faced pressure as Xiaomi's upsized share placement raised concerns about market liquidity. Despite the day's downturn, the Hang Seng Tech gauge has risen 24% this year, prompting investors to reconsider Chinese tech stocks as attractive investments amidst changing market dynamics. Alibaba Group Holding Ltd. and Sunny Optical Technology Group shares also experienced declines following warnings about potential bubbles in data center construction and capacity issues, respectively. The caution expressed by Alibaba's chairman regarding AI data center investments has added to the market pressure, highlighting potential challenges in the AI sector in the short term.