China’s challenge to U.S. dominance in artificial intelligence is increasingly moving from private markets into publicly traded stocks, creating a new way for ETF investors to bet directly on the country’s emerging AI model developers.
EMXETF’s newly launched China AI Tigers LLM ETF (NASDAQ:TGRZ) is built around that shift. The fund targets Chinese companies developing foundational AI models rather than casting a wider net across semiconductors, cloud computing, e-commerce and other technology businesses.
The timing was driven partly by the January listings of Z.ai and MiniMax, according to EMXETF founder Kevin Carter.
“The timing really came down to the IPOs — Z.ai and MiniMax both went public in January 2026, which suddenly made the China AI model trade investable,” Carter told Benzinga. He said the ETF was also designed to capture potential future listings from companies such as DeepSeek and Moonshot AI.
That pipeline could become increasingly important. Moonshot, developer of the Kimi models, is reportedly eyeing a Hong Kong IPO and recently raised more than $2 billion. It is also in early talks with Microsoft Corp (NASDAQ:MSFT), Amazon.com, Inc (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOGL) over potential revenue-sharing agreements involving its Kimi K3 model, Reuters reported.
Carter defines China’s "AI Tigers" as companies building foundational AI models, rather than businesses that simply use AI or supply the broader technology infrastructure. Many of these startups have links to Tsinghua University, which he describes as a breeding ground for some of China’s leading AI labs. Z.ai, for instance, emerged from Tsinghua research, while Moonshot AI’s founder Yang Zhilin studied there under Z.ai co-founder and Tsinghua professor Tang Jie.
Carter Sees a Valuation Convergence Trade
Carter argues investors may still be underestimating how far Chinese models have progressed.
“The biggest misconception is that China is still playing catch-up,” he said. “Some Chinese models are now competing near or even at the frontier, and American companies are already building on and using them.”
More importantly for investors, Carter sees a valuation disconnect. He said no Chinese AI model developer is currently valued above $100 billion, while American AI labs are pursuing dramatically higher valuations.
“There is arguably a convergence trade ahead,” Carter said.
That doesn’t necessarily mean Chinese AI companies are cheap by conventional metrics. Z.ai, for example, generated revenue of 953.9 million yuan ($141.9 million) in the first half of 2026, up 400%, but still posted a 2 billion yuan ($297.6 million) net loss as R&D spending reached 2.1 billion yuan ($312.4 million), per Reuters. MiniMax, meanwhile, more than doubled on its Hong Kong trading debut in January, valuing the company at about $13.7 billion at the close.
A Different Bet from Traditional China Tech ETFs
TGRZ, which carries a 0.86% expense ratio, isn’t intended to provide broad China technology exposure.
“This is not a diversified China technology fund; it’s a concentrated bet on the companies building China’s leading AI models,” Carter said.
That distinction matters as China’s AI strategy increasingly emphasizes open and lower-cost models. DeepSeek demonstrated that frontier-level AI development may not necessarily require U.S.-style spending, while Moonshot’s latest Kimi models have further intensified competition.
Carter believes that cost advantage could ultimately broaden adoption.
“China is pursuing a different playbook — open, customizable and dramatically lower-cost AI that can spread far beyond China,” he said. “There is tremendous room for both playbooks to grow.”
TGRZ will rebalance quarterly, giving it opportunities to add newly public AI developers. Carter said companies such as DeepSeek and Moonshot are precisely the type of future listings the ETF was designed to capture.
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