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Chinese AI stocks swing on token demand bets, not profits
Chinese AI stocks with market caps above US$10 billion are driving sharp swings in Asian trading as investors price them mainly on their AI roadmap rather than current earnings.
MiniMax and Zhipu are being traded on expectations of rising AI token demand.
In March, MiniMax averaged a 14-point intraday move and Zhipu saw a 13-point range, vs. 3.6% for Alibaba, while disclosed institutional holders owned 9.3% of MiniMax and around 13% on average across Asia’s five most volatile stocks.
Bloomberg Intelligence expects over 150% year-on-year revenue growth for MiniMax and Zhipu in 2028, but both have reported net losses and face competition from hyperscalers and incumbent leaders.
🔗 Source: Bloomberg
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Net losses hide different playbooks and fast cash drain
- In H1 2025, Zhipu booked a net loss of RMB 2.36 billion on RMB 191 million in revenue, which works out to a loss ratio above 12 to 1 1.
- Zhipu mainly sells on-premise enterprise deployments (software run inside a customer’s own data center, rather than in the public cloud) to state-owned enterprises (government-owned companies) and financial institutions. These deals delivered a 59.1% gross margin (profit after direct costs, before operating expenses) in H1 2025 1.
- MiniMax now leans on consumer apps such as its video generator Hailuo AI. Consumer products made up 71% of sales in the first nine months of 2025, with Talkie at 35% and Hailuo AI at 33% 1.
- That consumer mix also pushed MiniMax abroad. Overseas markets produced 73.1% of income as of September 2025, with the U.S. and Singapore leading 1.
IPOs come from a cash squeeze during a cloud API price war
- Cash runway sits at the center of the IPO push. Zhipu’s prospectus said its end-2024 cash balance could cover about 11 months at the H1 2025 operating cash outflow rate, without new financing 2.
- A price war in cloud services has squeezed profits in a core channel for AI models 1.
- Zhipu’s cloud API (application programming interface, a way for developers to access a service programmatically) gross margin slid from 3.4% in 2024 to -0.4% in H1 2025 1.
- JPMorgan expects both Zhipu and MiniMax to reach profitability starting in 2029 3.
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