Chinese AI giant Zhipu valued at 1280 times annual revenue: anomaly or the future of the market?
The artificial intelligence market continues to deliver surprises, and perhaps one of the most striking examples at the moment is the valuation of Chinese AI companies. I have carefully studied the latest market data, and the numbers I see make one think about a fundamental revaluation of an entire sector.
Take, for example, the company Zhipu (Z.ai), the developer of the GLM-5.2 model. Listed on the Hong Kong Stock Exchange on January 8, 2026, this company has already become the first publicly traded among large language model developers. After the release of GLM-5.2, its shares soared to the skies: on June 22, Zhipu's market capitalization exceeded $118 billion. Meanwhile, the company's annual revenue for 2025 was only about $107 million, with a net loss of 4.7 billion yuan.
Multipliers Detached from Reality
Let's do the math. With these figures, Zhipu is trading at a multiple of approximately 1280 times annual revenue. For comparison: to justify even a 50x multiple, the company would need to increase sales to $2.7 billion per year — 26 times the current level. And for a 20x multiple, growth to $6.9 billion would be required, which is 65 times higher. This is not just ambitious; it looks like pure speculation.
A similar picture is seen with another Chinese player, MiniMax. With a market capitalization of about $23 billion and revenue of $79 million, the multiple reaches 290 times revenue. For contrast: Alibaba, with its Qwen model, a market cap of $245 billion, and annual revenue of $151 billion, trades at just 1.6 times annual revenue. Of course, Alibaba is not a pure AI company, but the difference in valuations is colossal.
China vs. USA: A Valuation Gap
Interestingly, American "labs" look much more modest compared to their Chinese counterparts. OpenAI, with annual revenue of $25 billion and a private valuation of $852 billion, trades at 34 times annual revenue. Anthropic, with revenue of $47 billion and a valuation of $965 billion, trades at 21 times. This is tens of times less than Zhipu, clearly demonstrating the gap between expectations and reality in the Chinese market.
Why is this happening? Analysts point to a key problem: a significant portion of Chinese developers' revenue goes to third-party inference providers — such as OpenRouter, Venice, and BaseTen. Users want to work with Chinese models but are wary of sending data directly to China, preferring to use intermediary services. This creates an artificial barrier to monetization.
What Should Chinese Developers Do?
To turn the situation around, Chinese companies will have to prove they do not store user data and offer lower prices than competitors. Doing this for cultural and social reasons will be extremely difficult.
An alternative scenario is to take an equity stake in American inference providers and enter into agreements for early access to top models in exchange for a share of revenue. In this case, money would start flowing to model developers through the providers, but only as the overall market grows.
My professional opinion: The current valuation of Zhipu and other Chinese AI companies is a classic example of an "expectations bubble." The market is pricing in future growth that is unlikely to materialize in the coming years without a radical change in the business model. Investors should be extremely cautious: multiples of 1000+ times revenue are pure risk territory, where even a slight slowdown in growth could lead to a collapse. Watch how the Chinese giants solve the intermediary problem — this will become a key indicator of their real value.