On September 7, Jefferies published a report indicating that Zhipu's (02513.HK) ambition to attain an annual recurring revenue (ARR) of $2.4 billion by the end of 2026 surpasses market expectations. However, the sustainability of this target is under scrutiny, attributed to several factors: a notably high base in August, erratic growth in computing power availability, significant customer concentration, and minimal switching costs for customers. The report highlighted that although Zhipu's cloud business gross margin is anticipated to enhance in the first half of 2026, it might witness a downturn in the latter half, primarily due to the introduction of new domestic GPU clusters and the recommencement of the Coding Plan.

Jefferies has revised Zhipu's target price downward from HK$1,299.8 to HK$1,183.79, while retaining a 'Hold' rating. The firm has also upwardly adjusted its revenue projections for Zhipu from 2026 to 2029, ranging from a 37% to a 119% increase, to mirror the accelerated growth in its cloud business. Concurrently, net loss forecasts have been trimmed by 14% to 21%. In its sum-of-the-parts valuation approach, the valuation multiple for the cloud business has been reduced from 50 times the projected 2026 ARR to 30 times, bringing it in line with international counterparts.

Jefferies posits that the competitive landscape within China's large language model sector is intensely fierce. It suggests that full-stack cloud service platforms, boasting advantages in computing power, data resources, and monetization strategies—such as Alibaba (09988.HK) and ByteDance—are poised to outperform independent AI labs.