Morgan Stanley raises Zhipu's target price by 72%: shares soar 37% — a paradigm shift in Chinese AI
Analysts at a leading investment bank have revised their view on China's artificial intelligence sector, raising the target price for Zhipu shares by nearly 72%. This decision triggered a powerful rally: the company's stock surged more than 37%, continuing a confident five-day climb. This is about a fundamental shift in the valuation of the entire industry.
The key factor behind the revision was expanded access to computing resources and the successful completion of a new funding round. Analysts, including Gary Yu, raised the target price from 990 to 1,700 Hong Kong dollars (HKD). This signals that the previous logic—that competition among numerous open models would lead to their consolidation and a price collapse—no longer holds.
From Price War to Monetizing Intelligence
China's large AI model industry is forming a healthier commercial model. The sector is transitioning from price competition to monetization driven by model intelligence. Now, revenue comes not from the cheapest model, but the smartest one. If this trend takes hold, investors will need to reassess the entire industry in a new light.
Zhipu, founded in 2019 and known for its GLM series of large language models, has already raised $4 billion this year through a follow-on share placement in Hong Kong. The company is confidently narrowing the gap with Western counterparts, and this process will continue throughout 2026.
Cautious Optimism for MiniMax
The report also mentions other market players. For MiniMax, analysts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting the company's strongest growth in later stages. MiniMax shares gained 4.8% during the day. Alibaba also received a positive assessment 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%. The five-day rally in Zhipu shares shows that the market is already betting on this new paradigm.
My view: The target price revision is not just an adjustment of numbers, but a recognition that China's AI market is maturing. Investors should closely watch companies capable of turning model intelligence into steady cash flow, rather than chasing cheapness. This could mark the beginning of a new wave of revaluation across Hong Kong's entire technology sector.