MiniMax Stock Tumbles Nearly 10% on AI Model Quality Concerns

Shares of MiniMax Group Inc. tumbled nearly 9.8% in Hong Kong trading on Monday, extending a prolonged sell-off as the company’s latest artificial intelligence model faces investor scrutiny over its quality and reliability.

The stock fell to trade at HK$169.2 during the session, underperforming the broader market as Hong Kong's Hang Seng index posted a 0.4% gain.

Model Scrutiny

The negative sentiment follows the October release of MiniMax's new AI model, the M3.1 Flash. While the model was touted for cutting usage costs by 70% compared to its predecessor, it also drew attention for reportedly displaying a high "hallucination rate," a term for when an AI generates incorrect or fabricated information.

These quality concerns have tempered investor enthusiasm for the cost-saving benefits and raised questions about the model's practical applications. The release of the M3.1 Flash came after more than four months without a new flagship text model from the company, a period during which competition has intensified.

Ad

Broader Industry Pressures

MiniMax's decline is part of a wider downturn for publicly listed Chinese AI firms. Shares of peer Zhipu AI also fell more than 5% on Monday. Investors are scrutinizing the pace of innovation and the sustainability of high spending levels among Chinese developers, who face mounting pressure from price cuts and new releases by U.S. rivals.

The sell-off has pushed MiniMax shares below their Hong Kong IPO price and continues a retreat from their peak in March. The persistent slide reflects growing investor apprehension about the company's competitive standing amid an increasingly brutal pricing war in the AI sector.