China’s Zhipu AI reported robust revenue growth in the first half of 2026 despite continuing to operate at a significant loss. The Beijing-based artificial intelligence startup recorded revenue of 953.9 million yuan ($141.96 million) for the six months ending June 30, marking a 400 percent increase compared to the same period last year. However, the company posted a net loss of 2 billion yuan during the period, a slight improvement from a 2.4 billion yuan loss in the first half of 2025.

Zhipu, the first Chinese large language model developer to list on the Hong Kong Stock Exchange, also increased its research and development spending by 36.6 percent to 2.1 billion yuan as it seeks to enhance its product offerings. The company is navigating a highly competitive environment within China’s AI sector, facing pressure from established technology giants such as Alibaba and ByteDance, as well as emerging startups like Moonshot.

Another notable competitor, MiniMax, which debuted on the Hong Kong market in January, reported a 283 percent increase in first-half revenue to $116.6 million. However, its adjusted net loss more than doubled during the same period. Despite these gains, both Zhipu and MiniMax remain far behind leading U.S. AI companies in terms of revenue. Notably, Anthropic generated an annual revenue run rate exceeding $65 billion by the end of July, while OpenAI has surpassed $25 billion in annualized revenue earlier this year.

Zhipu aims to carve out a niche by focusing on AI models tailored for coding and cybersecurity applications. The company claims its flagship model, GLM-5.3, performs comparably to Anthropic’s Mythos 5 in some areas of code review and vulnerability detection, though it trails on more complex tasks related to vulnerability exploitation. In June, Zhipu’s market capitalization briefly surpassed HK$1 trillion following the release of its GLM-5.2 model, a milestone for a Chinese AI firm. Since then, its share price has declined by nearly 50 percent.

In response to tightening U.S. export restrictions on advanced semiconductor technology, Zhipu has moved to reduce reliance on imported chips. This month, it launched a lower-cost version of its AI model, GLM-5.3-Flash, which was developed entirely using domestically produced chips. Industry analysts, including those at JP Morgan, expect Zhipu’s full-year revenue to reach 5 billion yuan in 2026 and anticipate the company to achieve adjusted profitability by 2028.