Morgan Stanley raised its price target on Chinese AI startup Zhipu by nearly 72% on Thursday, sending the stock up and capping a five-day run where the company gained over 37%. The bank says China’s AI industry is leaving the price war era behind.
Analyst Gary Yu and colleagues raised Zhipu’s Hong Kong target from HK$990 to HK$1,700, citing two improvements: better access to computing power, the hardware infrastructure required to train and run AI models, and the completion of a new financing round.
From Price Wars to Intelligence-Driven Profits
For months, the dominant concern hanging over China’s AI sector was that an abundance of competing open-weight models would drive homogenization and a race to the bottom on pricing. Morgan Stanley says that logic is breaking down.
“China’s large-model industry is establishing a healthier commercialization environment,” Yu wrote, arguing the sector is shifting “from price competition to monetization driven by model intelligence.” The smarter model wins revenue, not the cheapest one. That shift, if it holds, changes how investors should value the whole sector.
Founded in 2019, Zhipu is best known for its GLM series of large language models and raised $4 billion in a Hong Kong share offering earlier this year.
BeInCrypto has tracked China’s AI models closing the gap on Western rivals throughout 2026. Morgan Stanley had previously flagged the potential for a broad AI-driven re-rating of Hong Kong tech stocks.
MiniMax Gets a More Cautious Read
The same report covered two other names. On MiniMax, the bank stayed “constructive” but lowered its target to HK$900. It says the company’s strongest growth will come in later stages rather than near term.
MiniMax still rose 4.8% on the day. Alibaba drew a bullish mention, with analysts pointing to its end-to-end AI capabilities, computing power advantages, and expanding cloud margins.
The broader Hang Seng Index opened 0.53% higher, with the Hang Seng Tech Index up 0.85%.
If Morgan Stanley’s monetization thesis holds, the companies that can translate model intelligence into recurring revenue will reprice sharply. Zhipu’s five-day climb suggests the market is already betting on it.
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