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After losing their semi-final German Alexander Zverev says Austrian Dominic Thiem can beat seven-time champion Novak Djokovic in the Australian Open final.

While ruing his own missed opportunities, Alexander Zverev says Austrian Dominic Thiem is playing well enough to win his first Australian Open title on Sunday night.

The German world No.7 fell to Thiem 3-6 6-4 7-6 (7-3) 7-6 (7-4) on Rod Laver Arena on Friday night in an enthralling showdown between two of tennis's brightest young stars.

It was 22-year-old Zverev's first grand slam semi-final but he wasn't satisfied with his performance.

He felt that world No.5 Thiem played the big points better.

"I had a lot of chances - I had 14 break points and that should be plenty," Zverev said.

"In the important moments, I didn't play my best and he did and that's where the match kind of went his way.

"I've just got to execute better next time but credit to him - he's playing unbelievable tennis right now."

Thiem ousted world No.1 Rafael Nadal in the quarter-finals before his win over big-serving Zverev.

The German, who beat former champion Stan Wawrinka in his quarter-final, rated Thiem as his toughest opponent of the tournament.

"He played some very high-level tennis," Zverev said.

"He was the best opponent I played this week so credit to him, he deserves to be in the final and I think he has a chance in the final if he's physically fine."

Thiem has made the last two French Open finals, played on clay, but never gone further than the fourth round at Melbourne Park.

But Zverev felt the 26-year-old was now a more complete hard-court exponent and rated Thiem's chances against seven-time champion Djokovic.

Zverev last faced Thiem in the ATP Finals in November, won by the Austrian in straight sets, and said he'd improved since then.

"I think he's playing much better than he played in London," Zverev said.

"He flattens his shot out much more ... now he has a complete hard court game and he's a much different and much better player.

"I do believe he's playing good enough - he's playing the best tennis of his life."