DeepSeek is nearing completion of a new funding round that could value the Chinese AI start-up at approximately 500 billion yuan (US$74 billion) before investment, according to sources familiar with the matter. The company is seeking to raise about 50 billion yuan in the round, which was expected to close before the end of August. The funding round includes incumbent investors from DeepSeek's last fundraising round, such as local venture funds Monolith and Shixiang Capital, and Chinese battery giant Contemporary Amperex Technology Limited (CATL). New investors in talks include CPE, Legend Capital, and Stony Creek Capital - a semiconductor-focused private equity firm historically linked to Zhu Yiming, chairman of chip giant ChangXin Memory Technologies. Funds backed by GigaDevice and Hefei state investment vehicles are also involved in the latest funding round.
Bearish bets against shares of Z.AI Co. and MiniMax Group Inc. have soared to records ahead of their earnings reports, highlighting growing investor worry over China's heated AI rivalry. According to data from S&P Global, short interest has climbed to 20% of the free float for MiniMax and 6% for Z.AI, as reported by NDTV Profit. Short selling ramped up even after the Hong Kong-listed stocks tumbled from record highs following their blockbuster listings early this year. The latest data shows short-selling volumes peaked in June 2026, with Zhipu recording 178,900 shares valued at approximately ₹3,300 crore and MiniMax hitting 239,700 shares worth around ₹1,800 crore. As per NDTV Profit, these numbers represent all-time highs for both companies, with the fact that Zhipu's short volume carries a higher dollar value despite fewer shares reflecting its substantially higher stock price following the 170% rally that has made it a magnet for both bulls and bears simultaneously.
The performance gap between Zhipu and MiniMax since late March has been striking, with Zhipu's stock surging roughly 170% through mid-June 2026 while MiniMax's shares cratered nearly 50% over the same window. This divergence has attracted pair traders who are going long on Zhipu and short MiniMax, pocketing the spread as the gap widens. The core thesis driving this divergence comes down to technology and pricing power, with Zhipu's GLM-5.2 model widely perceived to hold a meaningful edge over MiniMax's M3 model, particularly in enterprise applications where customers pay for access. Bernstein initiated coverage on August 4, 2026, giving Zhipu an Outperform rating with a target price of ₹1,350 and MiniMax a Market-Perform rating with a target of ₹275. The emerging strategy is straightforward: go long on Zhipu, short MiniMax, and pocket the spread as the gap widens, with investors betting that one company is positioned far better than the other in China's increasingly brutal generative AI price war.
A structural factor is amplifying pressure on MiniMax, as lock-up expirations in July 2026 freed approximately 65% of MiniMax's outstanding shares for trading, dramatically increasing supply available for short sellers. By contrast, Zhipu saw only about 6% of its shares become tradable during the same period. This asymmetry creates a mechanical disadvantage for MiniMax, with more borrowable shares meaning lower borrowing costs for short sellers and more downward pressure on the stock. Both companies secured funding from Alibaba and Tencent before going public, giving them strategic backing that typically signals staying power. However, backing from tech giants hasn't insulated MiniMax from the market's verdict on its competitive positioning, with neither company profitable and both carrying substantial R&D expenditures, a necessity in a sector where falling behind technologically can be fatal to a business model.
Zhipu's first-half revenue is expected to have risen about 153% sequentially, but its adjusted net loss is expected to have widened, according to data from Bloomberg. Results are due later Wednesday from MiniMax and next Monday from Zhipu. Felix Wang, tech sector head at Hedgeye Risk Management, noted that "Investors are increasingly concerned about the price war, which is hampering Zhipu's ability to raise pricing" and its profit margins. For MiniMax, its products are "stuck in the middle - not the most intelligent model, nor the cheapest." Neither company is profitable, and both carry substantial R&D expenditures, a necessity in a sector where falling behind technologically can be fatal to a business model.
Mainland investors have shown support for the pair, though their heavy buying has yet to spark a rebound. Their stake in Zhipu has climbed to 12% in less than three months since joining Stock Connect, while their holding in MiniMax quickly rose to 8.1% within just two weeks of its inclusion, according to Hong Kong exchange data. DeepSeek surprisingly moved to hike prices earlier this month, though it remains to be seen how this will impact industry profitability going forward. Results due later Wednesday from MiniMax and next Monday from Zhipu will help show how the firms have weathered the challenges so far in China's intensifying generative AI landscape.
