Zhipu surges; Goldman Sachs upgrades rating to "Buy"

On October 5, Zhipu strengthened in early Hong Kong trading and continued to climb in the afternoon, reaching HK$666 per share as of press time, up 6.3%. On the news front, Goldman Sachs recently upgraded Zhipu's rating from "Neutral" to "Buy" and adjusted its 12-month target price based on DCF valuation to HK$1,560. Goldman Sachs' research report said the upgrade was mainly based on several factors: First, Zhipu's commercialization path has become clearer. Goldman Sachs raised its forecast for the company's annual recurring revenue by the end of 2026 from US$2.7 billion to US$3.2 billion, mainly considering growth in Token demand and the company's implementation of new commercial cooperation terms with major Chinese and global cloud vendors starting in October; second, the expansion of computing infrastructure and improvement in the balance sheet are expected to support continued business expansion; third, improved cost efficiency is expected to drive an increase in the gross margin of the inference business. In addition, subsequent progress on products such as Harness and Co-Work was also taken into account.