Key facts
- China's AI chipmaker Moore Threads experienced a 20% stock price drop on Monday.
- The selloff occurred after millions of previously locked-up shares became eligible for trading.
- The shares were allocated to investors during Moore Threads' IPO.
- Despite the drop, investors who participated in the IPO are still showing significant gains.
- Moore Threads is a key player in China's drive for AI self-sufficiency.
Moore Threads, a prominent Chinese company aiming to rival Nvidia in the AI chip market, experienced a significant 20% stock price decline on Monday. The sharp drop occurred as millions of shares, previously subject to a nine-month lockup following its IPO, became available for trading on the Shanghai Star Market. The stock hit its lowest point since its December listing, reaching 415.48 Chinese yuan.
Despite the substantial selloff, investors who acquired shares at the IPO price of 114.28 yuan remain in a strong position, with gains still exceeding 260%. The stock had previously surged 425% on its debut and continued to climb, reflecting intense investor interest in China's burgeoning AI sector. This interest has been further fueled by U.S. restrictions on advanced Nvidia chips, intensifying Beijing's pursuit of technological self-sufficiency.
Other Chinese tech companies have also seen significant investor appetite, such as memory-chip maker CXMT, which raised $8.6 billion and saw its value jump 466% on its debut. AI model developers have also drawn attention, with Z.ai's shares trading at multiples of their IPO price.
Moore Threads is planning a Hong Kong listing. While JPMorgan forecasts robust growth in China's domestic AI compute demand, Maybank Securities analysts have expressed concerns about "insurmountable competitive hurdles" for Moore Threads in both software and hardware over the medium term.