The AI market is unfolding: Morgan Stanley radically revises its valuation of Zhipu's stock.
Morgan Stanley analysts raised the target price for shares of Chinese AI startup Zhipu by nearly 72%, triggering a powerful rally and extending the five-day gain in quotes to 37%. This signals a fundamental shift in the perception of China's AI industry, which the bank believes is moving away from a destructive price war.
The revision of the target price from 990 to 1,700 Hong Kong dollars (HKD) is not just a numbers adjustment, but a recognition of a new reality. Analyst Gary Yu and his colleagues see key growth drivers in expanded access to computing resources and the successful completion of another funding round. This gives Zhipu the resources to scale and strengthen its position.
From a price race to monetizing intelligence
Until recently, the main threat to China's AI sector was considered to be fierce competition among numerous open models, leading to their homogenization and a collapse in prices. However, Morgan Stanley notes that this logic is outdated.
"China's large AI model industry is forming healthier commercialization," Yu emphasizes. The sector is shifting from price competition to monetization driven by 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 reassess their valuations of the entire industry.
Mini market review: MiniMax and Alibaba in focus
In its report, the bank also mentioned other key companies. For MiniMax, analysts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting maximum growth at later stages. MiniMax shares rose 4.8% during the day.
Alibaba also received a positive assessment thanks to its strong positions in end-to-end AI and growing cloud business margins. 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 not just a speculative reaction. It is the market betting that Morgan Stanley's monetization forecast will prove correct. Companies capable of turning AI models into stable revenue will surge in value.
My view: The reassessment of Zhipu is an important marker for the entire sector. The market is tired of endless promises and now demands concrete financial results. Investors should closely watch how Chinese AI companies will monetize their technologies, as this will become the main value driver in the coming quarters.