Morgan Stanley Raises Chinese AI Startup Zhipu’s Target Price 72%: Stock Surges 37%

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.

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