Record short interest has been observed in two prominent Chinese artificial intelligence model developers, MiniMax Group Inc. and Zhipu (formally Knowledge Atlas Technology JSC Ltd.). This surge in short selling reflects growing investor skepticism regarding their future performance amid fierce competition in China's rapidly evolving AI sector. Analysts suggest that this bearish sentiment is a response to the intense pressure faced by these companies as new AI models and technologies emerge at a rapid pace.
While Zhipu's shares have seen a significant increase of 170% since the end of March, MiniMax has experienced a stark contrast, with its stock price dropping approximately 50% over the same period. This divergence has led to the emergence of a "pair trade," where investors are going long on Zhipu and short on MiniMax, anticipating further widening of the performance gap. The situation is expected to intensify in early July, when a substantial portion of MiniMax's stock, currently under an IPO lockup, becomes available for trading.
The broader context reveals a narrowing gap between the US and China in the AI race. Chinese firms like Alibaba's Qwen, DeepSeek, and Moonshot are demonstrating advancements, sometimes matching or exceeding US counterparts in specific metrics such as cost-efficiency, despite facing chip export restrictions from Washington. Alibaba's open-weight models, for instance, have garnered over 3 billion global downloads, surpassing Meta Platforms Inc. and Alphabet Inc. This competitive landscape highlights the challenges faced by companies like MiniMax, even as some Chinese AI firms achieve significant success with open-source strategies.
