India, Dec. 18 -- The world's best-performing stock is turning into a cautionary tale for investors chasing outsized returns from the AI boom.

RRP Semiconductor Ltd., which until recently was a little-known stock, has become a social-media obsession as its share price surged more than 55,000% in the 20 months through 17 December-by far the biggest gain worldwide among companies with a market capitalisation of more than $1 billion.

That's despite posting negative revenue in its latest financial results, reporting just two full-time employees in its latest annual report, and boasting only a tenuous link to India's chip-manufacturing ambitions.

A mix of online hype, a tiny free float and India's swelling base of retail investors locked th...