Shares of Knowledge Atlas Technology JSC Ltd, better known as Zhipu, gained in their Hong Kong debut following a US$558 million (RM2.27 billion) initial public offering (IPO), making it the first major Chinese generative artificial intelligence (AI) start-up to go public.
The stock closed at HK$131.50 (RM68.57) on Thursday, up 13.2%, after opening weaker. Zhipu offered 37.4 million shares at HK$116.20 apiece last week, with retail allocations oversubscribed by more than 1,159 times.
Zhipu is the first of China’s so-called “AI tigers” — start-ups developing large language models (LLMs) to rival OpenAI and Anthropic — to list publicly. However, its initial gain is modest compared with the strong debut of Chinese hardware firms, highlighting the tougher market environment for software developers. Analysts note that hardware companies, such as chipmakers, are seen as more central to Beijing’s push for technological self-reliance, while AI software faces fierce competition, price pressures, and limited access to advanced chips due to US export controls.
“Investor preference at this stage is still skewed towards tangible infrastructure,” said Gary Tan, portfolio manager at Allspring Global Investments. “Hardware plays offer clearer visibility on government support and a more quantifiable total addressable market.”
Zhipu co-founder and chairman Liu Debing acknowledged the challenges of a competitive domestic market, but highlighted the company’s international ambitions. “As we expand globally, users will recognise the value of our models,” he said.
The IPO proceeds will be largely allocated to research and development, with 70% earmarked for general-purpose AI model development. The Beijing-based company, founded in 2019 by Tsinghua University researchers, reported revenue of 312.4 million yuan (RM181.42 million) in 2024. Its backers include Alibaba, Tencent, and local government funds, which have helped Zhipu secure contracts with state-owned enterprises seeking customised AI infrastructure.
Despite the modest debut, analysts remain positive. Douglas Kim of Smartkarma assigned Zhipu a valuation of HK$223 per share, about 30% below its peer average. Sanford C Bernstein analysts noted that China’s AI sector is only months behind global leaders, predicting continued growth through 2026.
The IPO comes amid a broader surge in Chinese tech listings, particularly in semiconductors and AI-related hardware. Recent debuts by Shanghai Iluvatar CoreX, Shanghai Biren Technology, Moore Threads, and MetaX Integrated Circuits have recorded strong first-day gains, underscoring investor appetite for tangible tech assets over software ventures.
Zhipu’s current market capitalisation of US$6.6 billion based on the issue price remains lower than many of its chipmaking peers, reflecting the market’s current preference for hardware-focused investments over generative AI software companies in China.
