Market reassesses AI value: Zhipu shares surge 37% after target update
China's artificial intelligence sector is undergoing a paradigm shift. My analysis shows that investors are beginning to value companies not by the amount of capital burned on model training, but by their ability to turn intelligence into real profits. A striking confirmation is the rapid rise of Zhipu's stock, which gained more than 37% in a week.
In focus is the revision of the target price for Zhipu on the Hong Kong Stock Exchange. The forecast was raised from 990 to 1,700 Hong Kong dollars (HKD), representing an increase of nearly 72%. This decision is based on two key factors: a significant expansion of access to computing resources (a critical aspect for training and launching large models) and the successful completion of another funding round.
From price war to monetization of intelligence
Until recently, the main threat to China's AI industry was considered to be fierce competition among numerous open models, which was expected to lead to their consolidation and a collapse in prices. That logic no longer holds. The sector is shifting from price competition to monetization through model intelligence. Now, revenue comes not from the cheapest model, but from the smartest one.
Zhipu, founded in 2019 and known for its GLM series of large language models, raised $4 billion in an additional share placement in Hong Kong. This influx of capital likely became one of the catalysts for the valuation revision.
It is worth noting that the updated forecasts are mixed. For MiniMax, for example, the target price was lowered to 900 HKD, although the overall outlook remains "constructive." The company's largest growth is expected to occur at later stages rather than in the near term. Alibaba's shares also received a positive assessment due to its capabilities in end-to-end AI, its advantage in computing power, and the growth of its cloud business margins.
The market context confirms the overall optimism: the Hang Seng Index opened up 0.53%, while the Hang Seng Tech gained 0.85%.
My view: The revision of valuations is a signal of a fundamental shift. If the monetization forecast proves correct, we will witness a sharp appreciation of companies capable of converting AI models into stable income. Zhipu's five-week rise is not just a speculative surge, but a market bet on the new AI economy, where intellectual property becomes the main asset.