Nomura: China Internet & New Media — Moonshot AI Expert Call Takeaways

Nomura's China Internet team recently hosted an expert call focusing on Moonshot AI, a leading Chinese generative AI startup. Management projects that annual recurring revenue (ARR) will exceed USD 1 billion by the end of 2026, driven primarily by robust overseas API usage and advanced AI coding capabilities. As of mid-2026, annualized ARR already reached USD 400-500 million, growing 10-20% month-over-month. Revenue composition has shifted significantly toward API calls, and overseas contributions now surpass domestic revenue. The next major product catalyst is the K3 model, expected around September 2026. While AI coding currently offers the clearest monetization path, the next competitive frontier will likely expand into healthcare, education, and finance, where high-quality proprietary data will serve as the critical differentiator. To protect profit margins and enhance monetization, Moonshot AI is transitioning toward a closed-source strategy for its flagship models. The company is also increasingly utilizing domestic inference chips to reduce computing costs, achieving a gross margin of nearly 30% for current workloads. While the expert suggests that pure-play AI labs may ultimately outperform large internet platforms, Nomura disagrees. The brokerage maintains that large platforms like Alibaba (BABA US, Buy) and ByteDance remain formidable competitors due to their vast capital reserves, deep data ecosystems, and the strategic necessity of owning cutting-edge large language models. API price reductions will likely persist, but declining unit inference costs may offset this pricing pressure.