Zhipu surges 170% as AI pair trade with MiniMax gains momentum

A pair trade is taking shape in China's artificial intelligence sector, with investors piling into Zhipu as the perceived winner while betting against MiniMax, the laggard losing ground in the race to build commercially viable AI models.

Shares of Zhipu, formally known as Knowledge Atlas Technology JSC Ltd., have surged 170% since the end of March in Hong Kong, while MiniMax Group Inc. has fallen about 50% over the same period. The divergence comes as imminent listings of global AI rivals intensify scrutiny over model quality and profitability at the two startups, among the hottest Hong Kong debuts this year.

"Zhipu has the better model, with structurally better earnings potential. MiniMax is really not on the way to becoming a dominant platform," said Leonid Mironov, a portfolio manager at Gavekal Capital Ltd., calling the long Zhipu/short MiniMax wager "a very profitable trade."

The performance gap widened after a series of model updates and pricing changes revealed diverging strategies. Zhipu raised prices for its GLM models this year while maintaining sales volumes, signaling pricing power. MiniMax, by contrast, slashed the charge for its newest flagship M3 by 50% just a week after launch in an effort to lure customers — a move Goldman Sachs Group Inc. cited in a June 17 note cutting its price target on MiniMax by 14%. JPMorgan Chase & Co. analyst Olivia Xu raised her price target for Zhipu while downgrading MiniMax, calling its lower pricing a "signal of lower-than-expected model capability."

Consensus sales estimates for Zhipu have surged nearly 250% since the start of the year, far outpacing the outlook for MiniMax. Both stocks rank among the top three performers on the Hang Seng Tech Index this year, though Zhipu is the faraway leader with a gain of more than 1,500% since its January trading debut.

Lockup Expiry Adds Pressure on MiniMax

The pair trade may gain further momentum in early July when lockup restrictions expire. About 65% of MiniMax's total shares will be released on July 8, compared with 6% of Zhipu's freed for trading a day earlier, according to HSBC Holdings Plc estimates. The larger proportion of new MiniMax shares makes them easier and cheaper to borrow for short sellers.

Felix Wang, tech sector head at Hedgeye Risk Management, acknowledged that "it's popular to short MiniMax," but cautioned that both companies face similar long-term challenges. DeepSeek poses a competitive threat with its cheaper pricing, Wang said, and more AI IPOs are coming down the road — including possible listings by domestic players such as Kimi chatbot developer Moonshot AI and US majors.

BofA Securities initiated coverage of both AI names with a buy rating this week, expecting MiniMax to play catch-up after the overhang from the lockup expiry.

US Restrictions Boost Chinese AI Attention

The US government's order blocking foreign access to Anthropic PBC's top products has drawn more investor attention to Chinese AI alternatives. Zhipu seized the occasion to unveil its most advanced open-source model yet, helping to drive its shares up more than 70% this week alone.

"Zhipu are much better at convincing the market that their customers are stickier," said Gavekal's Mironov. If MiniMax cannot gain users even while Anthropic is being restricted from selling its models, "that's a really bad sign."

For investors, the divergence underscores a critical shift in China's AI landscape: the market is moving from sector-wide bets to stock-specific positioning based on model quality and commercial traction. Zhipu trades at a significant premium reflecting its perceived lead, while MiniMax faces the dual headwind of a price war and a looming share unlock that could amplify selling pressure through July.

This article is for informational purposes only and does not constitute investment advice.