Morgan Stanley radically revises its assessment of Zhipu: shares soared 37%, and the AI market is changing its paradigm.
Investment bank Morgan Stanley has raised its target price for shares of Chinese AI startup Zhipu by nearly 72%, triggering a powerful rally. The company's shares surged more than 37%, extending an impressive five-day winning streak. This signals that China's artificial intelligence industry is shifting from price wars to the monetization of intelligence.
Analysts led by Gary Yu raised the target price on the Hong Kong Stock Exchange from 990 to 1,700 Hong Kong dollars (HKD). Key drivers of the revision include expanded access to computing resources for training and launching models, as well as the successful completion of a new funding round that strengthened the company's balance sheet.
Just a few months ago, the dominant narrative for China's AI sector was the threat of commoditization and devaluation of open-source models due to intense competition. However, that logic is now outdated. The industry is forming a healthier commercial model where the winner is not the cheapest model, but the smartest one. The shift from price competition to monetization through intelligence means investors will have to fundamentally reassess the entire sector.
MiniMax and Alibaba: Different Dynamics
The report also mentions other key players. For MiniMax, analysts maintained a "constructive" outlook but lowered the target price to 900 HKD, expecting the strongest growth in later stages. MiniMax shares rose 4.8% during the day. Alibaba also received a positive assessment: experts highlighted its end-to-end AI capabilities, advantages in computing power, and growth in cloud business margins.
The Hang Seng Index opened up 0.53%, while Hang Seng Tech gained 0.85%, confirming the overall positive market sentiment toward Chinese technology.
Zhipu, founded in 2019 and known for its GLM models, raised $4 billion this year in a follow-on share placement in Hong Kong, making it one of the largest AI funding rounds in the region.
My view: This revision is not just a targeted update on a single company, but a marker of a shift in investment logic. If the market previously valued Chinese AI projects by their capital burn rate, the focus now is on the ability to generate sustainable profits. Zhipu's five-day rally is a bet that intelligence is becoming the primary commodity of the new economy. The only question is how many companies can truly turn their models into a stable cash flow, rather than just another polished presentation.