Morgan Stanley sharply raises Zhipu's target price by 72%: shares soar 37% amid AI paradigm shift
Analysts at Morgan Stanley have decided to radically revise their view on the Chinese artificial intelligence sector, raising the target price for shares of AI startup Zhipu by nearly 72%. This move triggered a powerful five-day rally — the company's stock surged more than 37%, clearly indicating a shift in market sentiment. The bank is confident that the industry is moving away from a grueling price war and transitioning to a new phase of development.
The analyst team led by Gary Yu raised the target price for Zhipu shares, traded on the Hong Kong Stock Exchange, from 990 to 1700 Hong Kong dollars (HKD). Key drivers of this optimistic forecast were expanded access to computing resources needed for training and deploying models, as well as the successful completion of another funding round.
From Price War to Monetizing Intelligence
Just a few months ago, the dominant narrative for the Chinese AI sector was fierce competition among numerous open-source models, which was expected to lead to consolidation and a collapse in prices. However, Morgan Stanley notes that this logic no longer holds. According to experts, the industry is forming a healthier commercialization model.
The key thesis is a shift from competing on low price to monetizing through model intelligence. Revenue will now come not from the cheapest model, but from the smartest one. If this trend takes hold, investors will have to completely rethink their approach to valuing the entire industry, betting on technological superiority rather than price dumping.
Divergence in Estimates: MiniMax and Alibaba
Notably, in the same report, the bank maintained a "constructive" outlook for MiniMax but lowered its target price to 900 HKD, expecting the company's largest growth in later stages. At the same time, MiniMax shares gained 4.8% at the moment. Alibaba also received a positive assessment, with analysts seeing strong positions in end-to-end AI, advantages in computing power, and growth in cloud business margins.
The market reaction was swift: the Hang Seng Index opened up 0.53%, while the Hang Seng Tech rose 0.85%. Zhipu's five-day rally is a clear signal that the market is already betting on the new paradigm.
My view: Morgan Stanley's target price revision is not just a point update, but a marker of a shift in investment logic across the entire Asian tech sector. If previously investors looked at scale and price, now the focus is on a company's ability to turn its algorithms into sustainable cash flow. This could lead to a significant revaluation of stocks for players who can prove their monetization, and conversely, to cooling interest in those who remain trapped in price wars.