Morgan Stanley sharply raises Zhipu's target price by 72% — shares soar 37%
Investment bank Morgan Stanley has revised its forecast for shares of Chinese AI startup Zhipu, raising its target price by nearly 72%. This move not only triggered a powerful surge in the stock price but also underscored a paradigm shift across China's entire artificial intelligence industry—from price wars to monetization of intelligent models.
Bank analysts led by Gary Yu raised the target price for Zhipu shares traded on the Hong Kong Stock Exchange from 990 to 1,700 Hong Kong dollars (HKD). Key drivers of the revision were expanded access to computing resources—critical infrastructure for training and deploying AI models—as well as the successful completion of another funding round.
Notably, just a few months ago, the main threat to China's AI sector was considered to be competition among numerous open-source models, which was expected to lead to their consolidation and a collapse in prices. Morgan Stanley emphasizes that this logic no longer holds. "China's large AI model industry is forming healthier commercialization," Yu notes.
The sector, he says, is shifting "from price competition to monetization driven by model intelligence." Now, revenue comes not from the cheapest model but from the smartest one. If this trend takes hold, investors will have to reassess the entire industry in a new light.
Founded in 2019, Zhipu is known for its GLM series of large language models. This year, the company raised $4 billion in a secondary share placement in Hong Kong, strengthening its financial base. Throughout 2026, Chinese AI models have been steadily narrowing the gap with their Western counterparts, and Morgan Stanley analysts had previously already forecast a global revaluation of Hong Kong tech stocks amid the AI boom.
MiniMax: Cautious Optimism
The bank's report also mentions two other companies. For MiniMax, experts maintained a "constructive" outlook but lowered the target price to 900 Hong Kong dollars. Analysts expect the company's greatest growth in later stages rather than in the near future. MiniMax shares gained 4.8% during the day. Alibaba shares also received a positive assessment: analysts highlighted the company's opportunities in end-to-end AI, its advantage in computing power, and growth in cloud business margins.
The Hang Seng Index opened up 0.53%, while Hang Seng Tech rose 0.85%.
The five-week rally in Zhipu shares, which has already exceeded 37%, is a clear market signal that investors are betting on the new monetization model. If Morgan Stanley's forecast proves correct, companies capable of turning AI models into stable revenue will see sharp price increases.
My view: This is a turning point for China's AI sector. The shift from price wars to intelligent monetization is a sign of market maturity. Investors should closely watch companies that not only build models but also know how to build sustainable business models around them.