Why does the market reward the high performance of LLM models when it belongs to a startup, but ignore them when it belongs to a giant?For three consecutive weeks, Xiaomi’s MiMo-V2-Pro AI model dominated the OpenRouter leaderboards. It was a rare feat that even high-flying startups like z.ai and MiniMax didn’t sustain.

Yet, on April 2, the very day MiMo’s API traffic peaked, Xiaomi’s stock price tumbled to its lowest point since May 2025, halving its peak valuation.Xiaomi is undeniably China’s closest parallel to Tesla. Both began as consumer tech companies that successfully extended into cars, and now both are pushing into AI.

But the story of Xiaomi's venture in AI is a story of the Big Co. versuses Challenger. What I call the paradox of the rising underdog.

The market views z.ai and MiniMax as pure-play AI bets, and sees their narratives as those of underdogs in an area dominated by Chinese big tech. When their models succeed, it validates their entire existence, driving valuations north of HK$300 billion. 

It’s worth noting that both companies are backed by Tencent and Alibaba.Xiaomi gets no such treatment. The market sees it primarily as a hardware conglomerate, with AI as the icing on the cake. For Big Co. like Xiaomi, Alibaba, or Tencent, AI spending is viewed through the lens of capital expenditure, a defensive cost necessary to keep phones, cars, and ecosystems competitive, rather than a new revenue driver.

But this is not only a question of business model but also about how these companies tell their stories.