Chinese startup Z.ai nears $1bn in sales

One of China’s top AI startups is closing in on a milestone the industry rarely reaches: about $1bn in annual sales. According to Bloomberg, Z.ai — formerly Zhipu and the company behind the GLM models — is set to become the first independent Chinese AI firm to hit that mark.

The figure is still a projection, not a booked result, and that matters. It relies in part on annualised recurring revenue, a run-rate measure rather than a full year of recognised sales. Even so, the growth behind it is hard to ignore.

In 2025, Z.ai posted revenue of about 724m yuan, or roughly $100m, up 132% year over year.

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JPMorgan expects that to rise to about 4.6bn yuan in 2026 and 30.9bn yuan by 2028, the year it projects the company will finally become profitable. For now, Z.ai is still lossmaking, and its losses have continued to grow alongside revenue.

What stands out is how the company makes money. A large share of revenue comes from on-premises deployments for state-owned enterprises and financial institutions, plus a rapidly expanding cloud business. Its API business is growing especially fast: annualised recurring revenue from its open platform reached 1.7bn yuan, up sixtyfold in a year.

Z.ai’s model strategy makes that growth more striking. The company has open-sourced its most capable systems, including GLM-5.2, making them free to download and run. In Western AI circles, that approach is often seen as undermining monetisation. Z.ai is betting on the opposite logic: free models broaden adoption, and that demand converts into paid cloud services, support, and on-premises deployments.

Founder Tang Jie has publicly defended that philosophy, arguing that frontier AI should remain open to everyone. The company’s revenue trajectory is now becoming the business case for that view.

There are clear caveats. Much of Z.ai’s revenue comes from state-owned buyers, which muddies the line between pure market demand and state-backed support. Its valuation is also lofty, at roughly $112bn after a rally of well over 1,000% since its January listing. The company has already raised billions in a follow-on share sale, and the stock price assumes those forecasts will be met.

It is also competing in a brutal market, where low-cost Chinese models undercut rivals at home and US labs abroad. Hitting $1bn in sales would be a genuine milestone. Keeping enough margin to turn that scale into profit is the harder test.