Market Analyst Joshua Mahony Discusses AI Company Zhipu’s Market Debut and Industry Competition

CGTN Europe

Joshua Mahony, Chief Market Analyst at Scope Markets, discussed Zhipu’s public offering and the growing demand for large language models. He highlighted the persistent unprofitability of many tech companies, the competitive cost advantages in China, and the potential risks tied to the global trade environment. Mahony also pointed to upcoming AI IPOs, including Minimax, and noted the long-term growth prospects for companies in this sector.

Transcript

00:00Let's talk now to Joshua Mahoney, Chief Market Analyst at Scope Markets.

00:04Good to see you, Josh.

00:05So, this is the first major new generative AI company to go public,

00:09and its performance suggests there is an appetite for this kind of thing from investors.

00:15Yeah, undoubtedly so.

00:16I mean, look, ultimately, this is the first opportunity to be able to buy into one of these large language models.

00:22Of course, we've all been talking about the likes of OpenAI and Anthropic over in the US,

00:27but whilst they seem to be gathering funding from some of their competitors

00:32or some of the companies they work alongside, it hasn't actually seen them go to market.

00:37This is an insight into the kind of demand that we're likely to see for them and some,

00:43but certainly it provides investors with the opportunity to be able to get in for one of the companies

00:50that perhaps down the line we might say could be a market leader.

00:53We just don't know exactly how things are going to settle and who's going to win out at this sort of early stage of the AI race.

01:00I mean, at this point, it is still an unprofitable company, isn't it?

01:03How do you assess it compared with some of the other AI firms we've seen debuting recently,

01:07more threads, Biron, for example?

01:11Well, I mean, look, ultimately being unprofitable as a tech company is part of the course, right?

01:17I mean, it's many of the major companies now that you now look at,

01:21and they're absolutely huge multi-billion or multi-trillion dollar companies started off as loss-making enterprises.

01:27That's not necessarily going to be too much of a concern over the near term.

01:32Certainly, I think the fact that over in China, some of the expenditures and the costs aren't anywhere near the kind of level seen over in the US

01:40will be attractive to many, and the willingness to try and expand out across the Asian region in particular,

01:47but also across some of the Middle East and Europe, means that perhaps this company, yes, it's making losses,

01:55but certainly the expenditures, nothing like what we're seeing over in the US,

01:58and therefore it maybe can be perceived as a lower risk play compared to some of their US competitors.

02:04Another potential headwind facing all AI companies, Jepu in particular, the changing trade environment.

02:13There are reports that there could be curbs on the use of NVIDIA chips on the way.

02:19Well, I mean, look, it's open to China, then they take them away,

02:23then suddenly Donald Trump says that they can sell the Blackwell chips.

02:27I mean, you know, it's not a great environment, quite frankly, for anyone to make investment decisions.

02:32You could say that as soon as they allow the sales of NVIDIA chips,

02:37suddenly the Chinese companies could just buy a huge amount of them in preparation for him to lock them off again once trade talks go sour.

02:46But also, I think NVIDIA and the US are well aware of the fact that if they completely lock it off,

02:52then the Chinese are likely to have greater emphasis to develop their own products.

02:56And if they catch up, then suddenly you don't necessarily have the US as any key part of the supply chain

03:03when it comes to the Chinese AI infrastructure build-out.

03:07Something that Jepu has already done, of course.

03:09We should say this isn't the last of the AI IPOs.

03:12More to come, including one later this week, Minimax.

03:15Yeah, I mean, look, this is going to be part of a major theme, probably for 2026,

03:22because whether it comes to the Chinese AI names,

03:26whether it comes to the large language models in the US,

03:30at some point they're going to have to likely come to market.

03:33And, you know, of course, we've come into this year off the back of a period

03:36where everyone's wondering whether the AI race is over.

03:39Suddenly you start to see these companies that are only just coming to market,

03:42and they still have a long way to go, a lot of growth to build on,

03:46and a lot of profitability to prove out.

03:49But certainly I would say that this really is a reminder of the fact

03:53that it's still sort of first innings when it comes to AI for many of these companies.

03:58Joshua, great to talk to you.

04:00Thanks so much for coming back on the program.

04:01That's Joshua Mahoney from Scope Markets.

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