Despite achieving a market capitalization exceeding one trillion Hong Kong dollars, Knowledge Atlas (ASX: 02513) has yet to turn a profit, raising questions about the sustainability of its current valuation.
The company, often referred to as the "world's first large-scale model stock," saw its market value surge past the trillion-Hong Kong-dollar mark on June 22, briefly joining the elite "trillion-dollar market cap club." This rally was widely attributed to the launch of its new flagship model, GLM-5.2. The model scored an impressive 51 points on the Artificial Analysis comprehensive benchmark, significantly outperforming other domestic competitors.
Catalysts Behind the Surge
The immediate catalyst for the stock's sharp rise appears to be the release of the GLM-5.2 model. Its open-source nature and strong performance metrics have generated significant market enthusiasm. Furthermore, a public exchange between Knowledge Atlas founder Tang Jie and Tesla CEO Elon Musk regarding the pace of AI development in China added to the company's visibility and investor interest.
As the company's share price climbed, the wealth of its two core founders, Liu Debing and Tang Jie, has grown substantially. They were recently listed with shareholding values of 32.03 billion yuan and 16.65 billion yuan, respectively.
The Persistent Profitability Challenge
Beneath the market enthusiasm lies a company still in a heavy investment phase. For the fiscal year 2025, Knowledge Atlas reported revenue of 724 million yuan, representing robust year-over-year growth of 131.85%. However, its net loss expanded by nearly 60% to 4.718 billion yuan.
The company attributes the widening losses primarily to continuously increasing research and development expenditures. In 2025, R&D expenses reached nearly 3.18 billion yuan, accounting for a staggering 439.09% of its total revenue. This high burn rate underscores the significant costs associated with developing and maintaining cutting-edge AI models.
Volatility in Valuation
The trillion-dollar valuation proved to be temporary. By the close of trading on June 24, Knowledge Atlas's share price had retreated to HK$2,174 per share, bringing its market capitalization down to approximately HK$969.3 billion. Despite this pullback, its valuation still surpasses that of several established Chinese internet giants.
Future Prospects and Funding
Knowledge Atlas has attracted substantial capital from major tech firms and investment institutions throughout its funding rounds. Following its listing in Hong Kong in early 2026, the company has already initiated plans for a secondary listing on Shanghai's STAR Market, aiming to raise 15 billion yuan. The proceeds are intended to fund further development of its foundational AI models and related services.
The key question for investors remains: when will the "domestic large-scale model leader" transition from heavy investment to sustainable profitability? The company's ability to monetize its advanced technology while managing its substantial R&D costs will be critical in determining the long-term validity of its ambitious market valuation.
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