AI-linked stocks in China fall back after early excitement

In short: Some Chinese AI stocks surged after listing, then fell fast, raising questions about how AI companies will earn steady profits.

What's going on

Investors have been treating artificial intelligence as a big growth story, and that includes a race between the US and China. In China, several AI companies have drawn strong attention, including Moonshot AI, DeepSeek, MiniMax, Alibaba and others.

Two Chinese AI companies, Z.ai and MiniMax, listed on the Hong Kong Stock Exchange earlier this year at multibillion-dollar values. Their share prices jumped at first. Z.ai rose 55 per cent in its first month, and MiniMax rose 33 per cent.

Then the mood changed quickly. MiniMax is now trading about 50 per cent below its IPO price. Z.ai surged much more, peaking at 732 per cent above its IPO price in June, but then fell 63 per cent in under a month. It is still up 318 per cent year to date.

The Financial Times notes one reason may be how many Chinese AI labs price their products. Some are more willing to give away the AI model itself and charge for processing power, meaning the computing needed to run it (like paying for electricity and engine time rather than buying the car). This can lead to intense price competition, and it can make it harder to see how revenue will keep up with the huge costs of building better AI.

What to watch

If more AI companies list their shares, investors will likely focus less on excitement and more on simple basics, like stable sales and believable paths to profit. More price competition, and pressure on the wider China tech market, could continue if the country’s economy stays weak.

Source: Financial Times