The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Robyn Mak

HONG KONG, Feb 27 (Reuters Breakingviews) - China's artificial intelligence boom is getting more predictable. MiniMax 0100.HK and Knowledge Atlas Technology 2513.HK, also known as Zhipu, are worth $63 billion combined after their stock prices more than quadrupled from market debuts last month. The hype is reminiscent of electric-vehicle builders like Nio 9866.HK that soared to wild valuations, only to crash into price wars and deepening losses. A similar fate awaits these latest technology darlings.

There is plenty to be optimistic about. Despite crippling U.S. sanctions and export restrictions on microchips and other components, Alibaba 9988.HK, ByteDance and smaller peers have all released new models over the past month that are broadly competitive with ones from OpenAI, Alphabet GOOGL.O and others. Zhipu's latest GLM-5 flagship product, for instance, is now the world's most powerful open-source model and ranks fifth among all types, according to independent research shop Artificial Analysis.

Unprofitable Zhipu and MiniMax, however, face grim financial prospectsand geopolitical threats. Just this week, OpenAI and Anthropic accused some Chinese AI labs of improperly using U.S. models to improve their own; both have called for tougher trade restrictions. With enterprise values of more than 100 times the revenue analysts forecast for the next 12 months, per LSEG, growth expectations for MiniMax and Zhipu are astronomical.

China's erstwhile EV champions offer a glimpse of what's probably around the bend. Nio, the country's answer to Tesla TSLA.O, went public in 2018 in New York at about 6 times the previous year's sales. Its shares surged 10-fold to reach nearly $63 each before falling more than 90%. Rivals Xpeng 9868.HK and Li Auto's 2015.HK Hong Kong-listed shares are down 60% and 40%, respectively, since they arrived in 2021.

Blame the industry's cutthroat quest for customers. In AI, a similar dynamic is playing out among deep-pocketed giants and ambitious newcomers such as DeepSeek. Alibaba, for example, spent more than $400 million in giveaways as part of a lavish Lunar New Year campaign to woo users to its Qwen chatbot; in November, it offered steep discounts for its biggest model.

There are also massive research and development expenses associated with training frontier models. Even after raising more than $500 million selling shares in Asia's financial hub, Zhipu's estimated monthly cash burn means it has roughly three years before it runs out of money. China's AI is destined to create a feeling of déjà vu.

Follow Robyn Mak on X.

CONTEXT NEWS

Artificial intelligence developer Anthropic said on February 23 that Chinese counterparts DeepSeek, MiniMax and Moonshot "illicitly" used its Claude chatbot to improve their own models.

The allegation follows a memo from OpenAI in February warning U.S. lawmakers that DeepSeek is targeting its ChatGPT system and others to replicate models and use them for its own training.

(Editing by Jeffery Goldfarb; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on MAK/ robyn.mak@thomsonreuters.com))