Z.AI opens down 4.4% as interim revenue misses by 30%

Z.AI reported interim revenue of RMB954 million, up 399.7% year over year but about 30% below market expectations.

HSBC Research cut its price target on peer MINIMAX-W (00100.HK) nearly 57% to HKD330, saying the company's annualized recurring revenue beat expectations but requires higher investment.

Z.AI's net loss narrowed to RMB2.071 billion from RMB2.351 billion in the same period last year, with a loss per share of RMB4.67. Revenue growth was driven by exponential expansion in its cloud deployment business, the group said after the market closed Aug. 31. The interim results cover the six months ended June 2026.

Shares opened down 4.35% at HKD1,143 on Sept. 1, with 329,100 shares traded in pre-market negotiated transactions worth HKD389 million. The short-selling ratio stood at 7.511% as of Aug. 31, reflecting elevated bearish positioning ahead of the results.

The cloud deployment business has become Z.AI's primary growth engine, with the segment's expansion accounting for the bulk of the revenue surge. The company's heavy investment in AI infrastructure to support that growth has kept it in a loss-making position, with the interim loss per share of RMB4.67 reflecting the scale of spending.

The revenue miss shows the AI cloud deployment segment is growing faster than the company can monetize it profitably. Despite fourfold revenue growth, the shortfall pressured the stock and could weigh on sentiment across Hong Kong-listed AI names. The narrowing loss was positive but insufficient to offset the revenue disappointment.

The results come as Hong Kong's AI sector faces a valuation recalibration. HSBC's sharp cut to MINIMAX-W's target price shows investors are demanding clearer paths to profitability from AI companies that have prioritized growth over margins. Z.AI's next test is its second-half results, where investors will watch whether cloud deployment expansion translates into narrower losses.

This article is for informational purposes only and does not constitute investment advice.