Morgan Stanley Lifts Zhipu Target Price 72%, Sees Shift in Chinese AI Industry

Morgan Stanley recently raised its target price for Chinese AI startup Zhipu by nearly 72%, sending the stock up and capping a five-day run where the company gained over 37%. Analyst Gary Yu and colleagues cited 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, China's AI sector has been plagued by concerns that an abundance of competing open-weight models would drive homogenization and a race to the bottom on pricing. Morgan Stanley says this logic is breaking down as the sector shifts 'from price competition to monetization driven by model intelligence.'

Zhipu has seen significant momentum after it was flagged by Morgan Stanley. 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.