Zhipu AI shares rebounded sharply on Tuesday, jumping over 20% after a prior 23% drop due to compute shortages. The stock had tumbled following the company's call for computing partners. Zhipu AI is the first of China’s “AI tigers” to publicly list, with shares trading nearly 400% above its IPO price.

The rebound comes amid concerns about AI model performance degradation linked to limited computing capacity. Despite this, Zhipu AI has seen investor optimism drive its valuation, reflecting broader confidence in China’s AI sector.

The situation highlights challenges for China’s AI firms, including competition and regulatory scrutiny. Meanwhile, U.S. AI startup Anthropic accused MiniMax, Moonshot, and DeepSeek of data theft, adding to sector volatility.

This volatility underscores the risks and opportunities in China’s AI market, where technological advancements and legal battles shape the industry’s trajectory.