Jefferies: Cuts Zhipu Target Price to HK$1183.79, ARR Guidance Beats Expectations but Sustainability in Question

BlockBeats News, September 7, Jef fries issued a report stating that Zhipu's fiscal year 2026 annual recurring revenue guidance of $2.4 billion exceeded expectations, but sustainability is questionable due to a high base in August, uneven computing power supply growth, high customer concentration, and low switching costs.

The report noted that while Zhipu's cloud business gross margin improved in the first half of 2026, it may decline in the second half due to the launch of new domestic GPU clusters and the resumption of the Coding Plan. The target price has been cut from HK$1,299.8 to HK$1,183.79, with a Hold rating maintained.

The firm raised its revenue forecasts for Zhipu for 2026 to 2029 by 37% to 119%, reflecting accelerated growth in the cloud segment, and lowered net loss forecasts by 14% to 21%. In the sum-of-the-parts valuation, the cloud segment multiple was reduced from 50x 2026 projected annual recurring revenue to 30x to better align with overseas peers. The firm still believes China's large language model industry is overcrowded and, relative to independent AI labs, prefers full-stack cloud service platforms with advantages in computing power, data, and monetization, such as Alibaba (09988.HK) and ByteDance.