China's AI sector shifts from price war to battle of intellects: Zhipu shares surge 37%
China's AI company market is undergoing a tectonic shift. A major investment bank has revised its outlook on the industry, raising its target price for Zhipu shares by nearly 72% to 1,700 Hong Kong dollars (HKD). This decision was immediately reflected in stock prices: the company's shares rose by more than 37%, extending the rally to five consecutive weeks.
At the core of this optimism lies a fundamental change in the market paradigm. The bank's analysts concluded that the previous logic—that competition among numerous open models would lead to their consolidation and a price collapse—no longer holds. China's large language model industry is forming a healthier commercial model, where the key factor is not price but the ability to monetize intelligence.
The sector is shifting from price competition to monetization through model intelligence. Revenue now comes not from the cheapest model, but from the smartest one. If this trend takes hold, investors will have to completely reassess the entire industry.
Zhipu: From Startup to Leader
Zhipu, founded in 2019, is known for its GLM series of large language models. This year, it raised $4 billion in a secondary share placement in Hong Kong, one of the largest funding rounds in the sector. Expanded access to computing resources and the successful completion of a new funding round are key drivers that analysts took into account.
Chinese AI models spent all of 2026 narrowing the gap with their Western counterparts. Earlier, the bank's experts had already predicted a global revaluation of Hong Kong tech stocks amid the AI boom, and the current revision is merely confirmation of that scenario.
MiniMax and Alibaba: Divergent Assessments
In the report, the bank also touched on other companies in the sector. For MiniMax, analysts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting the greatest growth in later stages rather than in the near term. MiniMax shares rose 4.8% during the day. Meanwhile, Alibaba's shares received a positive assessment due to opportunities in end-to-end AI, advantages in computing power, and growth in cloud business margins.
Against this backdrop, the Hang Seng Index opened up 0.53%, while the Hang Seng Tech Index rose 0.85%.
My view: The five-week rally in Zhipu shares is not just a speculative reaction to a forecast. It is a signal that the market is beginning to reassess Chinese AI assets in a new light. If model monetization truly becomes a priority, companies capable of turning intelligence into steady revenue could become the main beneficiaries in the coming years. Investors should closely watch how this trend develops in other segments of the technology sector.