Morgan Stanley radically revises its assessment of Zhipu: +72% to the target, shares soared 37%
Morgan Stanley analysts sharply raised their target price for shares of Chinese AI startup Zhipu by nearly 72%, triggering a powerful rally on the stock exchange. Over five trading sessions, the company's shares gained more than 37%, confirming a paradigm shift in the valuation of the entire artificial intelligence sector in China.
This revision is not just a mechanical adjustment of numbers. Analyst Gary Yu and his team raised the target price from 990 to 1,700 Hong Kong dollars (HKD), citing expanded access to computing power and the successful completion of another funding round. Notably, this is not an isolated decision but part of a broader trend: the bank is recording a fundamental shift in the logic of China's AI industry.
From price wars to monetizing intelligence
Just a few months ago, the dominant narrative was a race to lower prices among numerous open models. It was believed this would lead to the unification and devaluation of technologies. Now that logic is outdated. Morgan Stanley emphasizes that the industry is moving from competing on cheapness to monetizing model quality. Simply put, revenue comes not from the cheapest model but from the smartest one.
"China's large AI model industry is forming healthier commercialization," Yu notes. If this trend takes hold, investors will have to completely rethink their approach to valuing assets in this sector, abandoning volume-based multiples in favor of efficiency metrics and the intellectual value of the product.
Zhipu, founded in 2019 and known for its GLM series of large language models, has already raised $4 billion in a secondary share placement in Hong Kong this year. This indicates high market confidence in the company.
MiniMax cautious, Alibaba favored
In the same report, the bank mentioned other companies. For MiniMax, experts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting maximum growth at later stages of development. However, the market reacted positively: MiniMax shares rose 4.8% in a day. Alibaba also received a positive assessment thanks to strong positions in end-to-end AI, an advantage in computing power, and growth in cloud business margins.
Against this backdrop, the Hang Seng Index opened up 0.53%, while Hang Seng Tech rose 0.85%. Zhipu's five-day stock growth is not just a speculative surge but a signal that the market is beginning to bet on a new valuation model. Investors who can timely identify companies capable of turning AI models into stable income will gain a significant advantage.
My comment: Morgan Stanley's revision of targets is an important marker for the entire market. We are witnessing a transition from the era of the AI "arms race" to the era of the "race for profit." However, it is worth remembering that such rallies often outpace fundamental indicators. The key question is whether Zhipu and others can demonstrate sustainable monetization in the coming quarters, or whether we will see a correction toward real business metrics.