Morgan Stanley raises Zhipu's target price by 72%: shares soar 37% — a signal of paradigm shift in Chinese AI
While global markets have grown accustomed to evaluating Chinese AI companies solely through the lens of price wars, recent developments on the Hong Kong stock exchange point to a fundamental shift. The upward revision of Zhipu's target share price by nearly 72% — from 990 to 1,700 Hong Kong dollars — has acted as a catalyst for a powerful rally. The company's shares have risen by more than 37%, extending a five-week upward trend and forcing investors to reassess their strategies.
From Price Race to Intellectual Monetization
The key thesis behind this revision is that the old 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. The sector is transitioning from competing by lowering prices to monetizing through model intelligence. Revenue now comes not from the cheapest model, but from the smartest one.
This shift is also supported by fundamental factors. Expanded access to computing resources for training and running models, as well as the successful completion of a new funding round in which Zhipu raised $4 billion, create a solid foundation for further growth. While Zhipu demonstrates confident growth, analysts maintain a more cautious outlook on MiniMax, lowering its target price to 900 HKD and expecting the greatest growth in later stages.
Spillover Effects and Market Context
The positive assessment has also affected other companies in the sector. MiniMax shares rose by 4.8%, while Alibaba received a positive rating thanks to its capabilities in end-to-end AI, its advantage in computing power, and the growth of its cloud business margins. The Hang Seng Index opened up 0.53%, while the Hang Seng Tech Index rose 0.85%.
This report marks an important shift in the perception of China's AI sector. If monetization forecasts prove accurate, we will witness a sharp appreciation in the value of companies capable of turning AI models into stable revenue. Zhipu's five-week stock rally is not merely a speculative reaction, but a signal that the market is beginning to bet on a new, more mature paradigm for the development of artificial intelligence in China.
My expert view: The transition from a price war to intellectual monetization is precisely the factor that could lead to a sustainable revaluation of the entire sector. Investors should closely monitor companies' ability not only to build powerful models, but also to commercialize them effectively. This will become a key differentiator in the new phase of growth.