Chinese AI Developer Zhipu Hits Record $112 Billion Valuation

Shares of Hong Kong-listed artificial intelligence developer Zhipu AI surged to a record high on May 28, briefly reaching HK$1,993 intraday and pushing the company’s market capitalization above HK$880 billion ($112 billion), according to Caixin Global. The milestone marks a stunning ascent for the Chinese AI firm, whose stock has climbed nearly 1,600% since its Hong Kong IPO in January 2026.

A Meteoric Rise

Zhipu AI, which rebranded internationally as Z.ai in July 2025, listed on the Hong Kong Stock Exchange on January 8, 2026, at an issue price of HK$116.20 per share. The IPO raised over HK$4.3 billion ($558 million) and was oversubscribed 1,159 times, reflecting intense investor demand for exposure to China’s rapidly growing AI sector.

Since then, the stock has defied expectations. The company’s market capitalization now exceeds that of established tech giants including Xiaomi Group (HK$725.5 billion), JD.com, and Baidu, making Zhipu one of the most valuable Hong Kong-listed technology companies. As dn.com reported, Zhipu’s market cap is approximately 2.5 times that of JD.com and 2.4 times that of Baidu.

Financial Paradox: Surging Revenue, Deep Losses

Zhipu’s valuation story reflects a broader pattern in AI investing: enormous market caps built on future expectations rather than current profitability. The company reported 2025 revenue of 724 million yuan ($100 million), up 132% year-on-year. However, it also posted an adjusted net loss of 3.2 billion yuan ($443 million) for the same period.

The losses are driven by massive research and development spending. In the first half of 2025 alone, R&D expenditure reached 1.59 billion yuan — eight times revenue for the period. Despite this, the company’s cash reserves stand at 2.55 billion yuan ($358 million).

Zhipu’s Model-as-a-Service (MaaS) platform has shown explosive growth, with annual recurring revenue reaching 1.7 billion yuan in March 2026 — a 60-fold increase from the previous year. This metric has been a key driver of investor optimism.

Contrarian Pricing Strategy

While competitors in China’s hyper-competitive AI market have been slashing prices, Zhipu has taken the opposite approach. In early 2026, the company raised its API pricing by 83%, betting that its model quality will justify premium pricing. Rivals such as DeepSeek and Xiaomi charge as little as 0.025 yuan per million tokens for cached input.

Zhipu Chairman Liu Debing defended the strategy in a Bloomberg TV interview, stating: “The Chinese market’s hyper-competition has already pushed prices down. As we expand globally, international users will recognize this value. A price point one-seventh of rivals gives us a clear advantage the world can’t ignore.”

The Tsinghua AI Ecosystem

Founded in 2019 by Tsinghua University professor Tang Jie and researcher Li Juanzi, Zhipu emerged from the university’s Knowledge Engineering Group (KEG), one of China’s premier AI research labs. The company is considered one of China’s “AI Tigers” — a group of leading domestic AI companies that includes MiniMax, Moonshot AI (Kimi), and 01.AI.

According to IDC, Zhipu is the third-largest large language model market player in China and the largest AI model developer by revenue. Tang Jie’s academic lineage has spawned numerous AI startups, creating what analysts call the “Tsinghua AI ecosystem” — now the dominant force in China’s AI startup landscape.

Geopolitical Headwinds and Resilience

Zhipu’s rapid rise has occurred against the backdrop of escalating US-China technology competition. In January 2025, the US Commerce Department added the company to its Entity List over national security concerns, restricting its access to American technology.

Despite this, Zhipu has demonstrated remarkable resilience. The company has developed models compatible with domestic Chinese chips from Huawei (Ascend), Cambricon, and Moore Threads. In September 2025, it released GLM-4.6 using entirely domestic chips — a milestone for China’s push for technological self-sufficiency.

OpenAI named Zhipu as a major rival in its 2025 report “Chinese Progress at the Front,” underscoring the company’s growing global significance.

Global Ambitions and Sovereign AI

Zhipu is pursuing a “sovereign AI” strategy, building national AI infrastructure for partner countries. The company leads the “International Alliance for Independent Large Model Co-construction” and partners with 10 ASEAN countries and 10 Belt and Road nations. Overseas revenue accounted for 11.6% of total revenue in the first half of 2025, with Southeast Asian revenue growing from 0.5% of localized deployment revenue in 2024 to 11.1% in H1 2025.

The company has established offices in the Middle East, United Kingdom, Singapore, and Malaysia, positioning itself as a key player in the global AI infrastructure race.

What’s Next

Zhipu’s valuation has drawn comparisons to the dot-com era, with UBS analysts noting that lofty valuations reflect a “scarcity premium” and limited tradable shares due to lock-up periods. As these lock-ups expire, significant share supply could enter the market, potentially pressuring the stock price.

Chairman Liu Debing has stated that “profitability is not a priority; the focus is on advancing AGI.” The company’s next major model release, following GLM-5.1 in April 2026, will be closely watched as a barometer of its technical progress.

For now, Zhipu’s record valuation represents both a triumph for China’s AI ambitions and a high-stakes bet on the future of artificial intelligence — one that investors have embraced with extraordinary enthusiasm.