Key Takeaways:
Morgan Stanley raised Z.AI's price target 72% to HK$1,700 and cut MINIMAX-W's to HK$900, citing China's accelerating LLM commercialization.
The broker said China's large language models are shifting from price competition to intelligence-driven monetization, with winners sustaining a cycle of "better models, stronger monetization, more funding and computing power, larger model investment," according to the Aug. 7 report.
Z.AI's faster progress in the current round — driven by GLM5.2 improvements, computing-power acquisition and a new financing round — prompted Morgan Stanley to raise its 2026 recurring revenue forecast to US$2 billion. The broker kept MINIMAX-W's 2026 recurring revenue forecast at US$1 billion, calling the company's growth trajectory more back-end-loaded, with the upcoming M3 update and the 2-3 trillion-parameter M3 Pro serving as key catalysts.
Z.AI shares rose 1.1% to add HK$14, while MINIMAX-W fell 2% to lose HK$6.60 and Alibaba gained 1.8% to add HK$2.20. Morgan Stanley remains bullish on Alibaba, citing its full AI technology stack, computing-power advantages and solid cloud growth and margin expansion.
The broker lowered bear-case valuation multiples across the sector to reflect risks from global peers launching better models at lower prices, and raised 2027 R&D expense forecasts for both Z.AI and MINIMAX-W to more than US$1 billion to reflect the higher investment required for training large-parameter models.
MINIMAX-W trades below the street average, with 20 analysts covering the stock and a consensus target of HK$1,052, according to analyst consensus data. The Morgan Stanley cut brings its target below that average, showing the broker's caution on near-term monetization even as it stays constructive on the M3 pipeline.
The divergent targets reflect Morgan Stanley's view that commercialization and AGI are complementary — better monetization funds intelligence development, and better intelligence drives monetization. Investors will watch Z.AI's next financing round and MINIMAX-W's M3 launch for confirmation of the growth trajectories.
This article is for informational purposes only and does not constitute investment advice.
