Morgan Stanley sharply raises Zhipu's target price: stock soars 37% amid paradigm shift in Chinese AI
Morgan Stanley analysts have radically revised their view on Chinese AI developer Zhipu, raising the target share price by nearly 72%. The market reacted instantly: the company's quotes showed confident growth of more than 37%, extending the winning streak for the fifth consecutive week. This move is not just a targeted adjustment, but a signal of a deep shift in the valuation of the entire artificial intelligence sector in China.
Analyst Gary Yu and his team raised the target price for Zhipu's Hong Kong-listed shares from 990 to 1,700 Hong Kong dollars (HKD). Key drivers of the revision were the company's expanded access to computing resources needed for training and deploying models, as well as the successful completion of another funding round.
From price war to battle for intelligence
Just a few months ago, the main threat to China's AI sector was considered to be fierce competition among numerous open-source models, which was expected to lead to their consolidation and a collapse in prices. Morgan Stanley notes that this logic no longer holds.
"China's large AI model industry is forming healthier commercialization," Yu emphasizes. The sector, he says, is moving "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.
Zhipu, founded in 2019 and known for its GLM series of large language models, has already raised $4 billion in a secondary share placement in Hong Kong this year. This fact, combined with improved access to computing power, formed the basis for the optimistic forecast.
MiniMax: cautious assessment amid overall positivity
In the same report, the bank also mentioned other players. For MiniMax, experts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting the company's greatest growth in later stages rather than in the near future. MiniMax shares gained 4.8% during the day.
Alibaba also received a positive assessment: analysts highlighted its capabilities in end-to-end AI, its advantage in computing power, and the growth of its cloud business margins. Against this backdrop, the Hang Seng Index opened up 0.53%, while the Hang Seng Tech rose by 0.85%.
Zhipu's five-week stock rally is a clear illustration that the market is already betting on a new paradigm. If the monetization forecast proves correct, companies capable of turning AI models into stable income will sharply increase in value. My view: we are witnessing a classic transition from the "arms race" stage to the "race for profit" stage. Investors should closely watch which Chinese AI developers can not only create the most powerful model but also build a sustainable business model around it capable of generating real revenue. Zhipu, it seems, is at the forefront of this process, but the risks of overheating after such a rapid rally are also high.