China's Zhipu AI and Deepseek are Beating Big Tech at Its Own Game. They're Spending Big.

China is pulling out the big bucks to beat the U.S. in the mega-billion AI dash.

On Thursday, Zhipu AI announced it wants to raise $4 billion in new capital -- the latest move by Chinese artificial intelligence companies secure huge sums to compete with America's chip giants and hyperscalers along with start-ups OpenAI and Anthropic.

Shares of Zhipu AI, which trades as Knowledge Atlas Technology, jumped 11.3% in the Hong Kong exchange to HK$2,032 -- $259.31 in U.S. dollars. The price has surged more than 1,000% since the stock's listing in January.

The AI language model maker plans to sell 19.8 million shares at HK$1,588 Hong Kong dollars each, or US$202.65. That offering represents about a 13% discount to Wednesday closing price of HK$1,825 a share.

Thursday's stock move also signals that the AI trade -- under pressure in the U. S. -- is heading to China as investors drop chip makers for large-language models.

Last month, DeepSeek raised more than $7 billion in its first funding round. It rattled Wall Street last year by proving AI models can be developed far more cheaper than U.S. tech companies do. It's still incredibly inexpensive at only 3% of the price per-token of OpenAI's GPT 5.5.

Today, Zhipu, Alibaba and several other Chinese companies are turning into big AI players. making strides in the space.

Zhipu's GLM 5.2 AI model is the most highly regarded in China right now. In Artificial Analysis' multi-benchmark rankings, it came in fifth behind three models from Anthropic and one from OpenAI, and ahead of Alphabet-owned Google's Gemini models.

If a U.S. organization used the version that Zhipu hosts in its own cloud in China, the cost per token would be just 15% of that of the OpenAI model, according to estimates.

The competition from China isn't something to ignore, especially with IPOs from Anthopic and OpenAI on deck. If anything, Zhipu's strong Thursday's strong moves only raise the stakes from those trading debuts.

Write to Kit Norton at kit.norton@barrons.com

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July 09, 2026 10:42 ET (14:42 GMT)

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