Goldman Sachs Upgrades Zhipu to Buy with HK$1,560 Target Price

Goldman Sachs raised its rating on Zhipu from Neutral to Buy, setting a 12-month DCF-based target price of HK$1,560 per share. The bank also lifted its 2026 year-end ARR forecast to $3.2 billion from $2.7 billion and raised its 2026-2028 revenue estimates by 3% to 12%.

The upgrade reflects clearer monetization pathways, driven by strong token demand and new commercial agreements signed since October 2026 with Chinese and global hyperscalers. Goldman also cited expanding compute infrastructure, a stronger balance sheet to support scale, improved inference gross margins from cost efficiency, and continued progress on Zhipu's harness and Co-Work products.

The bank acknowledged risks including intensifying competition among Chinese AI model makers, recent concerns over ZCode data retention, shareholder dilution from about $9 billion in equity financing since July 2026, and a pre-IPO lock-up expiry starting in early January 2027. Still, Goldman said Zhipu remains one of China's top AI model companies, with the highest ARR run-rate among domestic peers and a lineup covering frontier models and smaller, cost-efficient flash models.

Goldman updated its base, bull and bear valuations to $98 billion, $157 billion and $32 billion, implying upside of 149% and 299% and downside of 19%. The bull case corresponds to HK$2,500 per share, while the bear case is HK$510 per share.