Morgan Stanley radically revises its assessment of Zhipu: +72% to the target, shares soared 37%
The market received a powerful signal: the target price for shares of Chinese AI developer Zhipu was raised by nearly 72%, triggering a confident rally and extending an impressive five-day winning streak — the company's market capitalization has gained more than 37%. This is not just a targeted adjustment, but a marker of a paradigm shift in the valuation of the entire Chinese AI sector.
The analytical team led by Gary Yu revised its forecast for Zhipu's shares, traded on the Hong Kong Stock Exchange, raising the target level from 990 to 1,700 Hong Kong dollars (HKD). The key drivers of the revision are a significant expansion of access to computing power needed for training and deploying models, as well as the successful completion of another round of financing.
From price wars to monetizing intelligence
Just a few months ago, the dominant narrative for the Chinese AI market was fierce competition among numerous open models, which was expected to lead to their consolidation and a collapse in prices. However, that logic is now outdated. The industry is forming a much healthier commercial model.
We are witnessing a fundamental shift from competing on low price to monetizing based on the quality of the model itself. Now, revenue is generated not by the cheapest, but by the most intelligent model. If this trend takes hold, investors will have to completely rethink their approach to valuing the entire industry.
Context and market reaction
Zhipu, founded in 2019 and known for its GLM series of large language models, has already raised $4 billion this year through a secondary share placement in Hong Kong. This indicates high investor confidence in the company's prospects amid the overall narrowing of the gap between Chinese and Western AI developments.
The report also mentions other players. For MiniMax, for example, a "constructive" outlook was maintained, but the target price was lowered to 900 HKD. Analysts expect the company's growth peak to come at later stages, rather than in the near future. At the same time, MiniMax shares rose by 4.8%, while Alibaba shares received a positive assessment thanks to strong positions in end-to-end AI and margin growth in its cloud business.
Significantly, against this backdrop, the Hang Seng Index opened up 0.53%, while the Hang Seng Tech gained 0.85%. Zhipu's five-day rally is a clear market bet that AI monetization forecasts will materialize, and companies capable of turning models into steady income will sharply increase in value.
My view: The 72% target increase is not just arithmetic, but a signal that institutional investors are beginning to separate the wheat from the chaff. The market is tired of buying promises and is now paying for the real ability to earn. The only question is how sustainable this new paradigm is and whether it will lead to a new bubble, but this time not driven by hype, but by fundamental metrics.