Bernstein: China Internet — The Kimi Moment: Rapid Thoughts on the Butterfly Effect
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Key Views
K3 validates that Chinese AI laboratories can keep pace with the global frontier, with the US-China AI gap estimated at roughly 3–4 months. K3 is priced at double GLM-5.2's cost, with both models occupying distinct points on the Pareto frontier. Increasing fragmentation and competition at the model layer benefit large distribution platforms and AI end-users. Alibaba's 36% stake in Kimi positions it to gain indirectly, with potential positive impact on Alibaba Cloud revenue growth. Kimi leads in pre-training scale, while Z.ai needs to launch a trillion-parameter model by Q1 2027.
Recommended Securities
- Tencent (700.HK): Outperform, target price HKD 780
- Alibaba (BABA): Outperform, target price USD 180
- Alibaba (9988.HK): Outperform, target price HKD 176
Key exhibits
Exhibit 1
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Exhibit 3
