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2026-11-04 11:28:21 JPMorgan published a research report stating that demand for Chinese artificial intelligence models is currently between two demand steps: coding and broader white-collar work. AI demand beyond coding has emerged later than the broker previously expected, leading it to lower target prices for Z.AI (02513.HK) and MINIMAX-W (00100.HK). However, the broker believes the market is overly pessimistic and remains positive on the sector, with Z.AI as its top pick. The broker said AI models can be viewed as the next-generation workforce for enterprises, while model companies are like schools training talent. Enterprises hire models according to capability thresholds similar to academic degrees, with demand advancing in stages. Coding applications have already surged in late 2025 as models became sufficiently reliable. China is at least about six months behind the US and remains in the coding stage, with expectations to follow the US in moving up the adoption ladder. The broker cut the two companies' target 2030 price-to-earnings multiples from 20x to 12x to reflect uncertainty over the timing of the next application inflection point. The broker believes commoditization and pricing power can coexist, with leading laboratories raising prices for top-tier models while attracting price-sensitive users through lower-priced tiers and continuously reducing their own inference costs. Z.AI's unit inference cost this year fell about 80% under the same hardware conditions, while the gross margin of its open platform and API business improved from negative 0.4% a year earlier to 24.6% in 1H26. The broker believes value will concentrate among a small number of companies capable of continuously producing cutting-edge models. The broker maintained an Overweight rating on Z.AI, cutting its TP by 40% from HKD2,000 to HKD1,200. It also maintained a Neutral rating on MINIMAX-W, lowering its TP by 33.3% from HKD300 to HKD200. Z.AI launches a new-generation model roughly every two to three months and has already raised guidance, with GLM-5.5/GLM-6 expected in November as the next catalyst. MINIMAX mainly competes on cost performance. If its M3 Pro gains market recognition in November and is priced in line with frontier models, the broker could turn more positive.(da/ad)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |