KawzInvests
Co-Author of Asymmetrical Bets, Photonics/Optical Cycle, AI/Defense/Space
Zhipu AI is a Chinese AI arbitrage, shipping models near frontier Western performance at a fraction of the valuation. Its GLM-5.1 scored 45.3 on a coding benchmark versus 47.9 for Claude Opus 4.6, a 2.6-point gap far smaller than the valuation gap. Zhipu is up 357% since its January IPO, double MiniMax's return, yet both trade at about $40B. x.comÂ
Zhipu AI stands to gain as AI models commoditize and results hinge on engineering, where Chinese companies are strong. A model's effectiveness is model times engineering times compute; China cannot yet beat GPT's base models, but engineering in coding is becoming more important and masks model advantages. As models commoditize, Chinese models catching up through engineering and reputation is inevitable, and a breakthrough "Seedance moment" in coding could come soon. x.com x.com x.com x.comÂ
Alibaba's Qwen models look able to beat costlier US AI: two weeks of testing showed no difference from US AI agents, at 80% less per token. US companies spending hundreds of billions and driving up compute costs risk losing the battle to cheaper Chinese models. A selloff to the low $100s would be a chance to buy much more. x.comÂ
Zhipu AI's stock is unattractive because the Chinese AI model space is simply too competitive to be an appealing investment. Its company vision still deserves respect, and its current valuation is not a bubble. x.comÂ
MiniMax should draw renewed attention because it will likely release another model soon. Chinese AI labs are probably quite close to each other in progress, yet their valuations are far apart, so attention should rotate back to MiniMax sooner or later. It is also further down the dilution path than Zhipu. x.comÂ
Alibaba is the cleanest public-market bet that Chinese AI labs are innovating rather than just distilling, and that cheaper models drive more usage. If China is innovating, Qwen drives Alibaba Cloud share; if Jevons paradox holds, Alibaba captures the spend across models, compute, data, chips and apps. AI products are already 30% of Alibaba Cloud's external revenue, above a $5B run rate, and the commerce cash engine can carry it through the capex/revenue mismatch. x.comÂ
Zhipu (Knowledge Atlas) is already valued at nutty levels. At HK$2,094, buying it on $1B of ARR is like paying $6T for Anthropic on $50B of ARR. Its GLM models are genuinely impressive, but that valuation comes before factoring in the headaches of owning Chinese stocks. x.comÂ
Alibaba looks like a decent buy as its narrative improves after Chinese AI model releases. Per Bloomberg, relayed by @StockMKTNewz, Alibaba launched a preview of its flagship Qwen3.8 Max, which it describes as comparable to leading frontier models and second only to Anthropic's Fable 5. x.com x.comÂ
Alibaba offers opportunity at $123 as a front-runner in China's AI buildout, particularly if its AI spending shows real returns and it proves it can compete with the US. Over $56 billion of AI and cloud investment over three years has made current free cash flow negative, like US hyperscalers. Cloud growth is expected near 45%, AI products are already 30% of external cloud revenue, and it holds $38 billion of net cash. Cloud growth, capex and guidance will drive the earnings reaction. x.comÂ
Zhipu, listed in Hong Kong as Knowledge Atlas Technology, has one of the most absurd valuations imaginable. It did about $105 million in revenue last year and lost more than four times that, yet the market valued it at roughly $128 billion this week, above 1,000x sales at the peak, on a float where barely 4% of the stock trades. Its open GLM-5.2 model may undercut Big Tech's AI moat, but valuation cannot be ignored forever. x.comÂ
Tencent could be the one true winner in Chinese AI because of its monopoly position, while everything else in China gets commoditized. x.comÂ
