Morgan Stanley sharply raises target for Zhipu: shares soared 37%, AI market shifts from price wars to intelligence
Morgan Stanley analysts have revised their view on China's AI sector, raising the target price for Zhipu shares by nearly 72%. This move triggered a powerful rally: the company's stock surged more than 37%, extending an impressive five-day winning streak. The bank is confident that China's artificial intelligence industry is finally moving away from a price competition model.
The key driver of the revision was raising the target price for Zhipu on the Hong Kong Stock Exchange from 990 to 1,700 Hong Kong dollars (HKD). Analysts led by Gary Yu note that the company is gaining broader access to the computing resources needed to train and deploy models, and has also successfully completed another round of financing. This essentially changes the fundamental picture for the issuer.
From a Price Race to Monetizing Intelligence
Just a few months ago, the main threat to China's AI sector was considered to be fierce competition among numerous open-source models, which was expected to lead to their consolidation and a collapse in prices. Morgan Stanley now states that this logic no longer holds. The market is shifting from simple rivalry over low prices to a battle for quality and the ability to monetize technology.
"China's large AI model industry is forming healthier commercialization," Yu emphasizes. According to him, the sector is shifting its focus from price competition to monetization through model intelligence. Now, revenue comes not from the cheapest model, but from the smartest one. If this trend takes hold, investors will have to completely rethink their approach to valuing the entire industry.
MiniMax and Alibaba: Different Assessments
In its report, the bank also touched on other key companies in the sector. For MiniMax, experts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting the greatest growth in later stages rather than in the near future. Meanwhile, MiniMax shares gained 4.8% during the day.
Alibaba shares also received a positive assessment. Analysts highlighted the company's strong position in end-to-end AI, its advantage in computing power, and growing margins in its cloud business. Against this backdrop, the Hang Seng Index opened up 0.53%, while Hang Seng Tech rose 0.85%.
The five-day rise in Zhipu shares is a clear signal that the market is already betting on a new paradigm. If monetization forecasts prove correct, companies capable of turning AI models into steady revenue will sharply increase in value.
My view: This revision is not just a targeted adjustment, but a marker of a shift in the investment paradigm in China's tech sector. The market is tired of endless "discount wars" and is now willing to pay for intellectual superiority. For investors, this means it's time to shift focus from companies competing on cheapness to those demonstrating a real ability to extract profit from their models. Zhipu, it seems, is becoming one of the main beneficiaries of this shift.