Chinese AI developer Zhipu has seen its stock surge an eye-popping 2,000% this year, pushing its valuation above $120 billion and making it a major player in the global AI race. But a key date—July 8th—looms, when a six-month lockup period expires, potentially unleashing a wave of insider selling. Meanwhile, defense stocks are diverging sharply after Germany scrapped plans to buy six large warships, sending Rheinmetall down 19% and lifting rival TKMS by 16%.
Zhipu's Meteoric Rise and the Lockup Looming
While much of the world's attention has been on American AI companies like OpenAI and Anthropic, Zhipu has quietly become one of China's leading AI developers. Chinese-built generative AI models now account for 15% of global usage as of late 2025, a dramatic jump from just 1% the year before. That growth has propelled Zhipu's stock to extraordinary heights, and JPMorgan has named it the top Chinese AI pick.
But the company's initial public offering came with a standard six-month lockup period, during which insiders and early investors are barred from selling shares. That lockup expires on July 8th, and the expiration could trigger a wave of selling as those investors look to cash in on the massive gains. That would put downward pressure on the stock price, even as the company plans a secondary share sale that could raise billions—far more than the $558 million it raised in its original listing.
Political Support and Profitability Concerns
Zhipu's success has been fueled by strong backing from the Chinese government, which has pushed measures to expand consumer AI adoption, ease listing rules for AI firms, and embed the technology into manufacturing, ecommerce, and logistics. But that support is not guaranteed. Beijing has a history of abruptly changing its stance toward tech billionaires, and any shift in policy could hit Zhipu hard.
On top of that, Zhipu remains deeply unprofitable and, for now, falls short of the scale and reach of US rivals like Anthropic and OpenAI. The company's open-source, low-cost approach—its newest models are free to download—contrasts sharply with the American model of expensive, proprietary systems designed to maximize profit per user. DeepSeek, another Chinese AI firm, charges about 33 times less than OpenAI for comparable workloads. The big question for investors is which approach will prove more sustainable in the long run.
For more on how consumer spending is shaping up, see our coverage of US Consumer Spending Holds Up as PCE Inflation Ticks Higher in May.
Defense Stocks Diverge on Germany's Warship U-Turn
Global military spending is rising, but not all defense stocks are benefiting equally. Germany's decision to scrap plans to buy six large warships sent shockwaves through the sector. Rheinmetall, the country's top defense firm and the expected winner of that contract, saw its stock slump 19%. Meanwhile, domestic competitor TKMS, which was already supplying Germany with four smaller warships, saw its stock jump 16% after the government doubled that order.
The lesson for investors: bigger defense budgets don't automatically lift all boats. Only the companies that win contracts come out on top. Germany's goal is to have the strongest conventional army in Europe by 2039, and contractors are fiercely competing to equip it.
Canada is also close to deciding who will win a contract to build a new fleet of submarines—potentially worth more than $70 billion, the largest such contract in the world. Two contenders remain: a South Korean consortium led by Hanwha Ocean, and a German-Norwegian group fronted by TKMS. With a trade war brewing with the US, Canada is pushing both suitors for sweeteners like promises to boost local manufacturing and create jobs. The winner is expected to be announced ahead of NATO's next meeting on July 7th.
For a deeper dive into the defense sector's winners and losers, check out Germany's Warship U-Turn Sends Defense Stocks Diverging: Winners and Losers.
What It Means for Investors
Zhipu's story highlights the risks and rewards of investing in high-growth AI companies. The lockup expiry on July 8th could create a buying opportunity if the stock dips, but it also signals that early investors may be looking to exit. The company's reliance on government support and its unprofitability add further uncertainty. For defense investors, the key takeaway is that rising budgets don't guarantee returns—contract wins are what matter. With Canada's submarine decision and NATO's July 7th meeting on the horizon, the sector could see more volatility.
For more on how geopolitical shifts are affecting markets, see our analysis of Chinese AI Firm Zhipu Plans Massive Share Sale After Rally Pushes Valuation Past $120 Billion.
