Zhipu Rally: Morgan Stanley Raises Target Price by 72% — Chinese AI Moves Away from Price Wars
China's artificial intelligence sector is undergoing a tectonic shift. My analysis shows that the era of dumping and racing to undercut model prices is giving way to a new paradigm — the monetization of intelligence. The most striking confirmation of this trend is the rapid surge in shares of AI startup Zhipu, which gained more than 37% over five trading sessions.
Reassessment: from 990 to 1700 HKD
The key catalyst was the decision by Morgan Stanley analysts to raise the target price for Zhipu shares on the Hong Kong Stock Exchange from 990 to 1700 Hong Kong dollars. That is a revision of nearly 72% — a signal the market embraced with enthusiasm. The reasons behind such a bold forecast lie in fundamental changes: expanded access to computing resources for training and deploying models, as well as the successful completion of a new funding round. In my assessment, the influx of capital and infrastructure capabilities directly translate into product competitiveness and scalability.
Morgan Stanley itself notes that the old logic — that a multitude of open-source models would lead to commoditization and a price collapse — no longer holds. Instead, the industry is shaping a "healthier commercialization." The key thesis: revenue now comes not from the cheapest model, but from the smartest one. This fundamentally changes the rules of the game for all market participants.
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. That is a serious bid for leadership. Throughout 2026, Chinese models have steadily narrowed the gap with their Western counterparts, and now the market is beginning to price that into asset values.
Cautious optimism for MiniMax and Alibaba
In the same report, analysts also mentioned other players. For MiniMax, a "constructive" outlook was maintained, but the target price was cut to 900 HKD. Experts expect the company's maximum growth to occur at later stages, rather than in the near term. MiniMax shares rose 4.8% on the day. Alibaba also received a positive assessment: analysts see its strengths in end-to-end AI, computing power, and margin growth in its cloud business.
Against this backdrop, the Hang Seng Index opened up 0.53%, while Hang Seng Tech rose 0.85%, confirming the overall positive sentiment among investors toward the region's technology sector.
My view: The shift from a price war to the monetization of intelligence is a long-awaited normalization of the market. Zhipu's five-day rally is not merely a speculative spike, but a bet on a new business model. If the forecast holds, we will witness a revaluation of the entire sector, where those who can turn AI models into a stable cash flow will win. Investors should closely watch companies' ability not only to create technology, but also to profit from it.