Investors are re-evaluating Chinese AI: Zhipu's target price surged by 72%, while its stock rose by 37%.
China's artificial intelligence sector is undergoing a fundamental shift, and the market is beginning to realize it. Following a nearly 72% upward revision of the target price for AI startup Zhipu's shares, the company's stock on the Hong Kong Stock Exchange surged more than 37%, extending an impressive five-day winning streak. This is not just a speculative spike, but a signal of a paradigm shift in how the entire industry is valued.
Analysts have raised Zhipu's target price from 990 to 1,700 Hong Kong dollars (HKD). Key drivers of the revision include expanded access to computing resources—the critically important "raw material" for training and deploying models—and the successful completion of a new funding round. The company emphasizes that the previous logic, which held that competition among numerous open-source models would lead to their consolidation and a price collapse, no longer applies.
The market is moving from a price war to the monetization of intelligence. Revenue will now come 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 Chinese AI companies. This is about a transition from "price competition" to "monetization through model intelligence."
Shifting Priorities: From Cheapness to Intelligence
Just a few months ago, the main threat to China's AI sector was considered to be the race to the bottom in pricing among dozens of open-source models. However, analysts are now noting the emergence of a healthier commercial model. Zhipu, founded in 2019 and known for its GLM series of large language models, has already raised $4 billion this year through a secondary share placement in Hong Kong, confirming investor confidence.
Significantly, the revision of valuations has not only affected Zhipu. For MiniMax, for example, analysts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting the greatest growth at later stages. Meanwhile, MiniMax shares rose 4.8% during the day, and Alibaba's stock also received a positive assessment thanks to its strong positions in end-to-end AI, advantages in computing power, and growth in cloud business margins.
The Hang Seng Index opened up 0.53%, while the Hang Seng Tech Index rose 0.85%, indicating an overall positive market sentiment toward China's technology sector.
The five-day rise in Zhipu's stock is not just a reaction to a single report. It is the market betting that Chinese AI companies can turn their models into a stable source of revenue. If monetization forecasts prove correct, we can expect a sharp appreciation in value for those players that can effectively convert intelligence into profit.
My take: The revision of Zhipu's target price is a landmark moment. The market is beginning to separate the wheat from the chaff, and companies with real monetization—not just the most advanced models—will come out ahead. Investors should closely watch how quickly Zhipu and other leaders can turn their technological advantages into sustainable financial metrics.