Jefferies Cuts Zhipu AI Target Price, Keeps Hold Rating

Jefferies kept a Hold rating on Zhipu (02513) but cut its target price to HK$1,183.79 from HK$1,299.8, implying 8.9% downside, according to ETNet. The broker said Zhipu AI's guidance for $2.4 billion in annual recurring revenue by end-2026 beat market expectations, but it questioned the sustainability of that growth. Jefferies cited a high base in August after the reopening of Coding Plan and the launch of new models, uneven growth in computing supply, and high customer concentration with low switching costs. Jefferies said two major customers each contribute more than $250 million in annual recurring revenue, accounting for at least 31% of total ARR. It also expects gross margin pressure in the second half as the newly launched domestic chip cluster remains in a rapid expansion phase and equipment utilization is still immature, lifting early-stage costs. The broker added that Coding Plan subscriptions resumed on July 31 after a suspension in the first half, but the subscription model is less profitable than token-based APIs even after price increases. Jefferies raised its 2026-2029 revenue forecasts for Zhipu by 37% to 119% and cut net loss estimates by 14% to 21%, but lowered the cloud business price-to-sales multiple to 30 times from 50 times based on 2026 ARR. It said the revised target price leaves about 10% upside and therefore maintained the Hold rating.