Knowledge Atlas Technology (Zhipu), the standout performer in China's AI rally, is planning a major share sale to raise billions of dollars in Hong Kong. According to Bloomberg reports, the AI model maker is working with advisers on a potential placement that may take place as soon as next month. The six-month lock-in period for the stock will end on July 8, creating an opportune timing for the fundraising initiative. The company is also aiming to issue shares in Shanghai to raise additional funds for model development, with a major fundraise expected to exceed the $558 million raised during its IPO.
Zhipu's stock has delivered extraordinary returns, with shares more than doubling in value in just the last nine trading sessions, including a 12% advance on Wednesday. During this period, the stock has risen 135%, bringing it to a current trading price of over HK$2,440 from its issue price of HK$116.2. The surge has taken Zhipu's market capitalization past HK$1 trillion ($128 billion), making it one of the most valuable AI companies globally. This performance significantly exceeds the 2,000% year-to-date gains reported earlier, demonstrating continued momentum in the AI sector.
Zhipu recently launched its GLM-5.2 AI model and is making the technology free and open for anyone to build upon, expecting to attract developers to its platform and embed its tools into the global market. This strategic move reflects the company's focus on building a developer ecosystem and expanding its global reach. The company's approach of open-sourcing its AI technology represents a significant shift in the competitive landscape, potentially creating network effects that could benefit long-term growth prospects.
Despite the eye-popping rally, analysts covering Zhipu do not expect the company to be profitable anytime soon, highlighting the challenging path to monetization in the AI model development space. Additionally, analysts noted that competitions with Anthropic do not stand up to scrutiny, due to the latter's financial strength, R&D resources, and access to reach. This competitive dynamic suggests that while Zhipu has achieved remarkable market valuation, it faces significant challenges in maintaining its competitive position against better-resourced global players.
The exceptional performance of Zhipu and other Chinese AI stocks comes against the backdrop of comprehensive policy support measures introduced by Beijing. China introduced measures on Thursday, June 18 to accelerate AI adoption and industry growth, including pledges to ease listing requirements and encourage dual listings for AI firms. These measures have provided significant momentum to the AI sector, with investors responding positively to the government's commitment to supporting artificial intelligence development, creating a favorable environment for companies like Zhipu to pursue major fundraising initiatives.
