ZTE's stock price plummeted 5.08% during intraday trading on Wednesday, reflecting significant selling pressure in the market.

The decline comes as investors take profits following the stock's previous surge driven by multiple catalysts including a Morgan Stanley rating upgrade and AI collaborations with major tech companies. Additionally, ZTE reported a concerning 46.58% year-over-year decline in its first-quarter net profit attributable to shareholders, raising fundamental concerns about the company's earnings recovery.

The Communications Equipment sector experienced broad weakness, with several major constituents including YOFC, Trigiant, Fibocom, and CIG all posting significant declines. This sector-wide selling pressure intensified the downward movement for individual stocks like ZTE, despite Morgan Stanley's previous assessment that short-term earnings risks had been largely priced in with a potential inflection point expected in the second half of the year.