Key Takeaways
An initial public offering by AI-powered drug discovery firm XtalPi Inc. surged more than 170% in its Hong Kong debut, the latest sign of a widening chasm between feverish demand for Chinese technology listings and a deteriorating IPO market in the US.
"It’s genuinely a confluence of factors rather than any single driver," Harrison Rolfes, a senior research analyst at PitchBook, said in a report. Rolfes noted that a "national champion premium" among investors in Asia and more digestible valuations for Chinese firms are contributing to the divergence.
Shares of XtalPi (07666.HK) closed up 173.1% on May 13 after a public offering that was 6,910.96 times oversubscribed, according to exchange filings. The performance contrasts sharply with the US market, where the median IPO has underperformed its benchmark by 42 percentage points within 120 days of listing over the past year, PitchBook data shows.
The success of XtalPi and its peers raises questions for global investors about whether US-listed companies still offer the best risk-adjusted exposure to the artificial intelligence boom. The trend suggests capital flows are increasingly favoring Asian markets, where AI-related valuation premiums are persisting longer than in New York.
XtalPi is not an outlier. Its blockbuster debut is part of a broader trend that has seen Hong Kong become a launchpad for Chinese AI startups. In the first quarter, four major Chinese AI firms — Z.ai, MiniMax, Biren Technology, and Iluvatar CoreX Semiconductor — helped drive more than $22 billion in AI-related exit value through Hong Kong listings, according to PitchBook. Including the surgical robotics company Edge Medical, the total for the five largest listings exceeds $24 billion.
This influx has helped Hong Kong reclaim its position as a top global IPO fundraising hub, with new listings in 2026 delivering an average first-day gain of 37%, according to Caixin. The performance is supported by strong investor appetite, including from Middle Eastern sovereign wealth funds taking anchor stakes in firms like MiniMax.
While Hong Kong celebrates a tech boom, the reception for US technology IPOs has grown increasingly frosty. Public markets appear to be treating AI as a displacement risk for existing software-as-a-service (SaaS) companies, a phenomenon some analysts are calling a "SaaSpocalypse."
Roughly 66% of companies that have gone public in the US since the start of 2025 are trading below their IPO prices. The list of laggards includes high-profile names like Klarna, down 67.1%, and Figma, which has fallen 85.7% since its debut. This historic stretch of underperformance has been dubbed the worst in PitchBook's dataset.
The frenzy has drawn comparisons to the dot-com bubble. Rich Privorotsky, a partner at Goldman Sachs, recently warned clients that the market action "bears a whiff of the year 2000," pointing to extreme euphoria in the semiconductor sector. Similarly, famed investor Jeremy Grantham, who called the 2000 and 2008 crashes, cautioned that the current AI boom is highly likely to end in a collapse.
Skeptics question how much future growth is already priced in. According to an analysis by Sequoia Capital, the revenue generated by AI applications is lagging far behind the massive investment in GPU infrastructure, leaving a gap of around $600 billion that challenges current valuations. As the initial euphoria fades, investors are bracing for a potential shakeout that will separate companies with clear commercial traction from those merely riding the AI narrative.
This article is for informational purposes only and does not constitute investment advice.
