CLSA has released a research report stating that following the lock-up expiration, KNOWLEDGE ATLAS (ASX: 02513) could theoretically see an increase of 25.6 million tradable shares, equivalent to 5.8% of its total issued shares. Domestic media reports, citing company sources, indicate that nearly 70% of cornerstone investors have expressed their intention to hold shares for the long term.

Additionally, there are reports suggesting KNOWLEDGE ATLAS is considering designing its own chips, alongside separate reports that the Chinese government is contemplating restrictions on overseas access to the country's top-tier AI models. CLSA anticipates that the company's share price will experience volatility in the coming trading sessions due to frequent news flow and increased liquidity.

Fundamental Perspective on Chip Plans

From a fundamental standpoint, CLSA views KNOWLEDGE ATLAS's plan to develop proprietary chips as aligning with its expectations. This move is seen as potentially enhancing the company's full-stack service capabilities, autonomy, and profit margins. However, the report notes that such an initiative requires substantial financial resources, and the speed of execution will impact its long-term Annual Recurring Revenue (ARR) growth trajectory.

Hurdles in Overseas Market Growth

The report highlights that since the launch of GLM 5.2, overseas market opportunities have been a key focus for investors. Nevertheless, CLSA believes the path to international expansion will remain bumpy, influenced by regulatory requirements and data security concerns. The firm suggests that a tiered model system could be a viable solution, where the most advanced models from frontier labs are kept proprietary or offered only to specific clients.

The formal disclosure of ARR data by the company could emerge as the next significant catalyst. CLSA points out that it has observed market expectations already running significantly ahead of the company's previous guidance.