Global financial markets are experiencing significant turbulence related to recent advancements in artificial intelligence in China. In response to China's growing presence in AI, the Nasdaq index sharply dropped by 2%, triggering a chain reaction of declines in Asian technology stocks.
The sudden shift, driven by the combination of a breakthrough commercial software release and active state support, caught Wall Street off guard. This rapid change forces a large-scale reassessment of who will ultimately control the future of global artificial intelligence.
Major global markets are seeing substantial declines today due to the Chinese startup Moonshot AI. The company released its highly anticipated large language model, Kimi K3, to the public, directly challenging the capabilities and performance of leading American AI models. Moonshot claims that Kimi K3 is an extremely efficient model capable of easily handling massive and complex computational tasks. Analysts are already comparing Kimi K3 to DeepSeek, which previously impacted stock markets.
The emergence of a viable and affordable Chinese alternative threatens the high valuations of dominant American technology companies. If Western firms lose their absolute technological advantage, their significant stock market premiums could quickly vanish.
On the political front, Chinese President Xi Jinping officially launched a new global AI alliance this week. The goal of this alliance is to unite international technology players within a defined structure. China aims for this alliance to be independent of Western regulatory control. For global investors, the signal is clear: China wants a stake in the technological space and to build it outside of United States control. The new alliance will also become a major competitor to US hegemony in AI, creating a structured network that could potentially exclude American companies from vital and rapidly growing emerging markets over the next decade.
The consequences of these events were immediate. Nasdaq fell sharply, fueled by steep drops in key semiconductor and software stocks. Among the largest participants in the Nasdaq 100 decline were Google, NVIDIA, AMD, Meta, Netflix, and Microsoft. The fall quickly spread from Nasdaq eastward: technology-focused indices in Tokyo (Nikkei), Taipei, and Seoul also recorded deep losses as traders sought to protect their capital. Specifically, the Nikkei showed a decline of more than 4%.
Investors fear a technological cold war is unfolding, which could lead to stricter trade sanctions. Chip manufacturers are particularly vulnerable right now, as new political tensions could easily disrupt critical equipment supply chains. The current sell-off indicates a much deeper concern about the long-term future of AI. For many years, Western tech companies enjoyed an unimpeded monopoly on developing high-end AI and global infrastructure. That sense of confidence and security has now been completely lost. In the future, investors will have to learn to account for a globally divided world by political barriers and monitor changes in other countries' policies alongside corporate earnings during this uncertain period.
Upon the expiration of the share lockup period, two leading Chinese artificial intelligence companies experienced drastically different outcomes: Zhipu AI's shares rose by 13%, while MiniMax's shares fell by 18%, reflecting fundamentally distinct business models and varying levels of market confidence in these companies.
On July 8th and 9th, respectively, both companies faced initial lockup expiration events that resulted in diametrically opposed outcomes. Zhipu AI's shares increased by 13.35%, approaching a market capitalization of $126 billion. Meanwhile, MiniMax's shares sharply declined by nearly 18%, closing at HK$297.4, which was below its Initial Public Offering (IPO) price.
This divergence is not only due to different unlock proportions. Zhipu AI faced the unlocking of only 5.76% of shares held by 11 key investors, primarily state-backed funds with long-term mandates. In contrast, MiniMax saw the unlocking of 44.85% of its shares, expanding the tradable volume from 3% to nearly 50%. This allowed early venture investors, including Hillhouse, Sequoia, IDG, Alibaba, and miHoYo, to exit the company.
These price fluctuations are underpinned by fundamentally different business trajectories. Zhipu AI benefited from shifting its market focus towards Agent-type applications and AI coding, where its GLM series ranks among the best domestic models. Revenue from the company's corporate API and MaaS platform demonstrates strong demand, reaching a gross margin of 41% in 2025, indicating pricing power confirmed by recent price increases without loss of sales volume.
MiniMax, which was valued twice as high as Zhipu at the time of its IPO, based on its multimodal offerings and AI companion services, witnessed a shift in its market narrative. After reaching a peak market capitalization of HK$400 billion, its shares declined for over three months amid the cooling of the multimodal concept following the halt of OpenAI Sora and difficulties in monetizing video models. MiniMax's gross margin stands at 25%, suggesting weaker pricing power; its flagship M3 model was launched with a subsequent constant price reduction of 50% within just one week.
The company faces additional hurdles due to new regulations for AI companions taking effect on July 15th, which restrict the functions of AI emotional interaction, specifically banning virtual companions for minors. Although MiniMax Talkie/Xingye products constitute the bulk of revenue, income from Hailuo AI and the open platform is growing rapidly.
Nevertheless, MiniMax possesses advantages, including foreign revenue accounting for 73% of total revenue in 2025, serving 236 million users in over 200 countries. The company's revenue doubled compared to the previous year, while marketing expenses decreased by 40%, indicating improved unit economics. For both companies, these lockup events mark a transition from pricing controlled by a small number of shares to valuation determined by the broader market, a trend expected to continue with future unlock tranches.
