Zhipu AI, or Z.ai, was founded in 2019 and is a major provider of large language model (LLM) chatbots to businesses in the world's second-largest economy.

Its market debut in Hong Kong, along with MiniMax's on Friday, comes before any initial public offering (IPO) announcements from top US startups OpenAI -- the maker of ChatGPT -- and Anthropic, known for its Claude chatbot.

Both Chinese flotations were oversubscribed, with Zhipu's IPO raising some HK$4.3 billion (US$552 million).

An AI boom has helped push tech stocks to record highs in recent months, but they are also volatile as global investors watch intently for any signs of a bubble.

Poe Zhao, China tech analyst and founder of Hello China Tech, told AFP that this week's IPOs "demonstrate both the revenue potential and the fundamental challenges facing this new generation of LLM companies".

"The high demand definitely reflects broader optimism about Chinese AI," he said.

"Do I think there's a bubble? Yes. But I want to distinguish between 'bubble' and 'bubble risk'. These companies need capital intensity."

In January 2025, Chinese startup DeepSeek shook the tech world with a low-cost, high-performance reasoning model that upended assumptions of US dominance in the sensitive sector.

A year ago, Washington put Zhipu, backed by conglomerate Tencent, on its export control blacklist over national security concerns.

And Disney along with other US entertainment outfits including Universal is suing MiniMax for copyright infringement.

MiniMax targets the consumer market, particularly outside China, with its generative AI tools for speech, music and video, as well as text.

Zhao said he did not expect Zhipu or MiniMax to be profitable "any time soon".

"That depends on two industry-wide shifts: significantly lower computing costs and much larger AI demand to spread those costs across," he explained.

Beijing has reportedly been encouraging tech firms to use homegrown microchips owing to Washington's on-and-off restrictions on top-end Nvidia chips.

Shengyun Lu, founder of LSY Consulting, said Zhipu and MiniMax were among the so-called "six tigers" of well known LLM providers in China, competing with tech giants such as Alibaba and ByteDance.

"To run a foundational model company, it costs a lot and takes a lot of time," he cautioned.

"IPOs allow the companies to raise money for financing their future research activities, but on the other hand, the initial investors are seeking an exit."