Morgan Stanley raises Zhipu's target price by 72%: Chinese AI shuns price wars
Key signal for the market: Morgan Stanley has radically revised its assessment of Chinese AI startup Zhipu, raising the target share price by nearly 72%. This served as a catalyst for a five-day rally, during which the company's shares gained more than 37%. The bank's analysts are recording a fundamental shift in the industry — a transition from competing on cost to monetizing intelligence.
My team is closely tracking this case. Morgan Stanley experts raised Zhipu's target price on the Hong Kong Stock Exchange from 990 to 1,700 Hong Kong dollars (HKD). The reasons are expanded access to computing resources (the hardware base for training and launching AI models) and the successful completion of a new funding round.
From a price race to profit on intelligence
Just a few months ago, the main threat to China's AI sector was considered to be competition among numerous open models, which would lead to their consolidation and a collapse in prices. Morgan Stanley emphasizes: this logic no longer works.
"China's large AI model industry is forming healthier commercialization," analysts note. The sector is moving "from price competition to monetization through model intelligence." This means that revenue goes not to the cheapest model, but to the smartest one. If this trend takes hold, investors will have to reassess the entire industry in a new way.
Zhipu, founded in 2019 and known for its series of proprietary large language models GLM, raised $4 billion this year in a follow-on share offering in Hong Kong. Chinese AI models have been narrowing the gap with Western counterparts throughout 2026, and analysts predicted a global revaluation of Hong Kong tech stocks amid the AI boom.
MiniMax: cautious assessment
In the report, the bank mentioned 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 at later stages, rather than in the near future. MiniMax gained 4.8% in a 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 the growth of its cloud business margins. The Hang Seng Index opened up 0.53%, while Hang Seng Tech rose 0.85%.
If Morgan Stanley's monetization forecast proves correct, companies capable of turning AI models into stable income will sharply increase in value. The five-day rise in Zhipu's shares shows that the market is already betting on this.
My verdict: This is not just a target price adjustment, but a paradigm shift. The market is beginning to pay for intellectual differentiation, not scale. Zhipu demonstrates that Chinese AI companies have a real path to sustainable profit, and this makes the sector investment-attractive in the long term, despite volatility.