The market is reassessing Chinese AI: Zhipu's target price soared by 72%, and its stock hit new records.
China's artificial intelligence sector is undergoing a paradigm shift. A major investment bank raised its target price for shares of AI startup Zhipu by nearly 72%, triggering a powerful rally: the company's stock gained more than 37% and extended a five-week upward trend. This is not just a targeted adjustment—it is a signal of a fundamental reassessment of valuations across the entire industry.
The bank's analysts raised the target price for Zhipu's Hong Kong-listed shares from 990 to 1,700 Hong Kong dollars (HKD). Key drivers of the revision included expanded access to computing resources (a critically important factor for training and deploying models) and the successful completion of the latest funding round. The company, founded in 2019 and known for its GLM series of large language models, has already raised $4 billion this year through a follow-on share placement in Hong Kong.
From price war 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 consolidation and a collapse in prices. Now that logic is outdated. The industry is shifting from price competition to monetization driven by model intelligence. Revenue comes not from the cheapest model, but from the smartest one.
This is confirmed by market dynamics as well: MiniMax, another AI company in the report, received a "constructive" outlook, although its target price was lowered to 900 HKD. Analysts expect the company's greatest growth in later stages. Alibaba's shares also received a positive assessment thanks to strong positions in end-to-end AI, advantages in computing power, and growth in cloud business margins.
My take on the situation
The revaluation of Zhipu is just the tip of the iceberg. The market is beginning to understand that Chinese AI models are rapidly closing the gap with Western counterparts, and investors will have to reassess the entire industry in a new light. Zhipu's five-week stock rally is a bet that companies capable of turning AI models into steady revenue will be worth significantly more. If this trend takes hold, we will see a large-scale revaluation of the entire Hong Kong technology sector.