Morgan Stanley raises Zhipu's target price by 72%: shares soar 37%
Morgan Stanley analysts have revised their outlook on China's AI sector, raising the target price for Zhipu shares by nearly 72%. This move not only triggered a powerful surge in the stock price—up more than 37% in a single day—but also extended a five-week rally, confirming a paradigm shift in the industry: from competing on low prices to monetizing intelligent models.
The analyst team, led by Gary Yu, raised the target price for Zhipu's Hong Kong-listed shares from 990 to 1,700 Hong Kong dollars (HKD). Key drivers of the revision included expanded access to computing resources for training and deploying AI models, as well as the successful completion of another funding round. This signals that the company is strengthening its operational base and preparing for scaling.
Just a few months ago, the main threat to China's AI market was seen as the commoditization of open-source models and, consequently, a price collapse. However, as I have noted in my reviews, the logic of the "race to the bottom" is outdated. The sector is transitioning from a price war to intelligent monetization: revenue now comes not from the cheapest model, but from the smartest one. If this trend takes hold, investors will have to completely rethink how they value the entire industry.
MiniMax: Cautious Optimism
In its report, the bank also mentioned other key assets 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 of the company's development rather than in the near term. Still, the market reacted positively: MiniMax shares rose 4.8% in a day.
Alibaba shares also received a positive assessment. Experts highlighted the company's strong position in end-to-end AI, its advantage in computing power, and growing margins in its cloud business. Against this backdrop, the Hang Seng Index opened up 0.53%, while the Hang Seng Tech Index rose 0.85%.
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 placement in Hong Kong. This underscores investors' growing appetite for Chinese AI projects, which are increasingly closing the gap with their Western counterparts.
My view: Morgan Stanley's target price revision is not just a point update but a marker of market maturity. Investors who continue to value Chinese AI companies using the old "race to cheapness" playbook risk missing a new wave of growth driven by intellectual capitalization. Zhipu's five-week rally is just the first signal that the market is beginning to bet on model quality rather than price.