Z.AI (02513.HK) surged 5.09% in intraday trading on Wednesday, staging a sharp recovery from the prior session's steep decline triggered by the announcement of a massive HK$314.1 billion stock offering that had sparked dilution concerns among existing shareholders.

The stock had dropped as much as 20% intraday on the previous trading day after the large-scale share sale was launched in Hong Kong. The selloff also reflected profit-taking following a rally that saw the stock surge over 30% on July 21 and gain another 10% on July 24. Despite the broad selloff, northbound funds were net buyers of Z.AI during the prior session, signaling continued institutional confidence in the stock's longer-term trajectory.

The proceeds from the stock offering are expected to fund business expansion and technology research and development. Haitong International recently raised its target price on Z.AI to HK$2,300, reiterating an Outperform rating, citing accelerating annual recurring revenue growth and continued model capability expansion through its GLM-5.2 flagship model and 1GW domestic-chip-powered data center.