CICC raised its target price for Zhipu AI (02513.HK) by 13 percent to HKD900 after the company’s recurring revenue from its AI model-as-a-service platform massively outpaced expectations. The bank, which maintained its "Outperform" rating, cited a 60-fold year-on-year increase in annual recurring revenue (ARR) from Zhipu's application programming interfaces (API) as of March 2026.
"The growth trajectory of API ARR in 2026 significantly exceeded the firm's and market expectations," CICC said in its report. The bank raised its price target despite the stock's 29.6% surge on the day, which brought its price to roughly HKD905.5, just above the new target.
Zhipu’s API ARR reached RMB1.7 billion, a key metric that suggests accelerating adoption of its AI models by downstream customers. The performance prompted CICC to raise its 2027 price-to-sales valuation multiple to 50x.
The analyst action followed Zhipu's 2025 results, which were in line with expectations. The company posted revenue of RMB724 million, a 132% year-on-year increase, and an adjusted net loss of RMB3.18 billion.
While CICC boosted revenue forecasts, it lowered net profit forecasts for 2026 and 2027 by five percent and 14 percent, respectively. The report attributed the profit reduction to a higher mix of API revenue, whose gross margins are still in a growth phase.
The dramatic outperformance in Zhipu's API revenue signals strong market adoption of its AI models, potentially solidifying its position as a leader in the AI-as-a-service sector against competitors like SenseTime (00020.HK).
The upgrade suggests CICC believes the market is willing to look past near-term losses and focus on top-line growth and market share capture. Investors will now watch for the company's ability to convert its surging revenue into sustainable profit margins.
This article is for informational purposes only and does not constitute investment advice.
