Moonshot Targets $10 Billion Valuation After $500 Million Raise

This article first appeared on GuruFocus.

Moonshot is pushing for a step-up in valuation that could reshape the conversation around China’s AI contenders. The company is targeting a $10 billion valuation as it expands a funding round already backed by Alibaba Group Holding (NYSE:BABA) and Tencent Holdings (TCEHY), highlighting investor appetite for domestic large language model developers. Discussions around additional financing began in late January, roughly a month after Moonshot secured $500 million at a $4.3 billion valuation. Existing investors including Alibaba, Tencent and 5Y Capital have already committed more than $700 million to the first tranche of the latest round, according to people familiar with the matter, though it remains uncertain whether the company can ultimately reach its targeted valuation.

The urgency reflects broader momentum in China’s AI race. Beijing-based Moonshot recently released Kimi K2.5 ahead of the Lunar New Year holiday, positioning itself within a wave of model upgrades from local peers. K2.5 is now among the most-used large language models on OpenRouter, ranking well ahead of DeepSeek and Alphabet’s (NASDAQ:GOOG) Google Gemini on that platform. On benchmarking site Artificial Analysis, K2.5 ranks second among open-source models, behind only Zhipu’s GLM-5. Even so, at a proposed $10 billion valuation, Moonshot would still trail rivals Zhipu and MiniMax Group, both valued at more than $29 billion following their initial public offerings this year, which collectively raised over $1 billion in Hong Kong.

Founded by former Tsinghua University professor Yang Zhilin, who previously worked on AI initiatives at Meta Platforms and Google, Moonshot monetizes through tiered chatbot subscriptions and enterprise offerings, although it trails Zhipu and MiniMax in commercialization. The company holds 10 billion yuan ($1.4 billion) in cash and, according to an internal memo in December, is not in a rush to pursue an IPO. Paying users in China and overseas markets grew more than 170% month-on-month from September to November, based on that memo. This week, Moonshot launched a cloud service allowing paid users to host its OpenClaw agent, a move that could support deeper platform engagement as competition across China’s AI landscape continues to intensify.