SENSETIME Group’s stock soared its most in more than two years after releasing the latest version of its SenseNova generative AI model, highlighting the intense interest surrounding China’s efforts to develop artificial intelligence (AI). The shares gained as much as 36 per cent after the company revealed SenseNova 5.0 during its Tech Day event in Shanghai. The ChatGPT-like platform has “significantly” improved in terms of linguistic and creative capabilities, chairman Xu Li said. Trading in the stock was suspended after the abrupt surge. SenseTime is among a growing number of Chinese corporations and startups exploring ways to develop an answer to OpenAI’s ChatGPT. In 2023, it joined Baidu and Alibaba Group Holding in developing its own in-house generative AI platform. The potentially transformative technology has since become a key area in which Beijing is encouraging local companies to compete with their US counterparts. SenseTime’s Wednesday (Apr 24) rally may stem in part from a depressed valuation. The company, once celebrated as a leader in the Chinese AI arena, has shed more than 80 per cent of its market value since a 2021 IPO, after the US sanctioned the firm much like it did Huawei Technologies. The abrupt death of a co-founder last year also rattled investors. “There’s very little detail to warrant such a move other than the fact that expectations are very low and the stock is oversold,” said Vey-Sern Ling, a managing director at Union Bancaire Privee. “There are barely any fundamentals to rely on.” SenseTime touted its AI model’s ability to create both text and visual content, not unlike OpenAI’s Sora. It also cited benchmarks to emphasise SenseNova 5.0’s improvements over the previous iteration. SenseTime, once a leader in AI-powered facial recognition, stepped up efforts in generative AI after apps from ChatGPT to Sora roused the global tech industry. It launched the first SenseNova in April 2023, and was among the earliest batch of Chinese companies to win government approval to roll out services to the public. The company is trying to reverse a dramatic slowdown in growth in the face of rapidly intensifying domestic competition and geopolitical tensions. The US government blacklisted the company in 2019 on allegations related to human rights violations in Xinjiang. That restricted its access to capital and crucial US tech components, compounded by curbs on the sale of advanced AI chips and chipmaking equipment to Chinese firms. Short-seller Grizzly Research in 2023 accused the firm of inflating revenues, which SenseTime denied. Its stock remains one of the most shorted tech plays in Hong Kong, according to S&P Global data. Short interest accounted for more than 10 per cent of SenseTime’s free floating shares, which touched a record low on Friday. “The AI craze has never faded in China, and it is regarded as an important part that can stimulate China’s technological revolution and promote productivity,” said Shen Meng, a director at Chanson & Co. “However, China’s big models lack both computing support and academic research innovation, and many companies rely on marketing to keep it as a hot topic.” BLOOMBERG