Morgan Stanley radically revises its assessment of Zhipu: +72% to the target, shares soared 37%
Investment bank Morgan Stanley has sharply raised its target price for shares of Chinese AI startup Zhipu by nearly 72%, triggering a powerful rally on the Hong Kong stock exchange. The company's shares rose more than 37%, continuing an impressive five-day upward streak. The bank is confident that China's artificial intelligence industry is finally moving away from a destructive price war.
A Paradigm Shift: From Dumping to Intelligence
Analysts led by Gary Yu have revised their view of the market. The target price for Zhipu's shares has been raised from 990 to 1,700 Hong Kong dollars (HKD). Key drivers include expanded access to computing power for training and launching models, as well as the successful completion of another funding round.
Just a few months ago, the main threat to China's AI sector was seen as the consolidation of numerous open-source models and, consequently, a price collapse. That logic is now outdated. The industry is forming a healthier commercial model where the winner is not the cheapest but the smartest model. Revenue is generated not by price but by intelligence.
This is a tectonic shift. If the trend holds, investors will have to fully reassess the entire sector, not just individual players.
Zhipu and MiniMax: Two Different Forecasts
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 offering in Hong Kong. Throughout 2026, Chinese AI models have been narrowing the gap with Western counterparts, and the market is now beginning to take notice.
At the same time, for another company in the sector, 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. Alibaba was also in the spotlight — experts highlighted its end-to-end AI capabilities, advantage in computing power, and growth in cloud business margins.
The market backdrop is also positive: the Hang Seng Index opened up 0.53%, while Hang Seng Tech gained 0.85%.
My view: The reassessment of Zhipu is not just a correction of numbers but a signal of a shift in the investment paradigm in Chinese AI. The market is beginning to pay for intellectual property and monetization capability, rather than scale and cheapness. Zhipu's five-day stock rally is clear evidence that investors are already betting on this new reality. The only question is which competitors will be able to meet the new valuation standards.