Key Takeaways:
A new class of Chinese artificial intelligence stocks is experiencing extreme price swings, with one surging over 700% in just five days, as retail investors pile into a narrative-driven rally marked by thin institutional ownership.
"They have no earnings, valuations are difficult to quantify, high potential but low certainty, and volatility will continue," said Daniel So, a senior trading strategist at Goldhorse Capital Management, noting his clients prefer shorter holding periods for these names.
The speculative fervor is creating some of Asia’s most volatile stocks. Institutional funds that require disclosure hold just 9.3 percent of AI developer MiniMax Group Inc., compared to roughly 50 percent for established giants like Tencent Holdings and Alibaba Group. This absence of an institutional anchor has led to wild price action, with MiniMax’s shares swinging an average of 14 percentage points per day in March.
The volatility presents a significant risk for investors chasing momentum, especially as the pending inclusion of some firms into the Shanghai-Hong Kong Stock Connect program threatens to bring in more mainland retail traders known for favoring speculative bets.
The core narrative fueling the rally is a bet on explosive demand for "tokens," the basic units AI models use to process data and generate output. Investors are wagering that token providers like MiniMax and Zhipu AI will be the primary beneficiaries of this demand wave. MiniMax's latest model, the M2.7, has climbed to third on OpenRouter's popular model rankings, outperforming offerings from DeepSeek and Alibaba.
This optimism persists despite staggering financial losses. MiniMax recorded a net loss of $1.9 billion last year, while Zhipu AI is projected to see its net loss widen by 60 percent in 2025. Still, investors pushed Zhipu’s stock up 35 percent in one session this week, choosing to focus on long-term potential over current profitability.
Market professionals advise prudence. "Chasing the rally is risky because some companies' business models are unproven and changes can be quite rapid," said Jasmine Duan, a senior investment strategist at RBC Wealth Management Asia.
Others believe the current hype overlooks a critical dependency. Luo Jing, an investment director at Value Partners Group, pointed out that computing infrastructure remains the decisive factor in China's AI race, giving established industry leaders with massive data centers a long-term strategic advantage.
This article is for informational purposes only and does not constitute investment advice.
