<div id="readability-page-1"><div>Morgan Stanley released a research report stating that foundation models continue to scale, benefiting from US computing power and Chinas engineering efficiency. The broker believes the recent surge in token usage and pricing power signals non-linear growth in annual recurring revenue (ARR) for frontier models, as well as higher valuations for high-intelligence-density (cost per token) frontier models such as MiniMax-W (00100.HK) +7.000 (+0.933%) Short selling $447.67M; Ratio 16.085% , Zhipu (02513.HK) -25.000 (-2.734%) Short selling $181.80M; Ratio 10.803% , and Alibaba-W (09988.HK) -1.800 (-1.382%) Short selling $710.43M; Ratio 10.417% .The broker noted that the recent launch of the DeepSeek-V4 model further demonstrated improvements in the efficiency of domestic models. Chinese AI labs are matching their US peers in model intelligence, while inference costs are only 15% to 20% of those of US counterparts.Morgan Stanley forecasts that by the end of 2026, ARR of frontier models will reach USD1 billion to USD1.5 billion, and further expand to USD2.5 billion to USD5 billion by the end of 2027 (base to bull case range), implying 3 to 5x annual growth. The brokers key Hong Kong picks include MiniMax and Zhipu, as well as Alibaba, which possesses comprehensive AI capabilities.Morgan Stanley raised the TP for Zhipu (02513.HK) -25.000 (-2.734%) Short selling $181.80M; Ratio 10.803% from HKD560 to HKD990 in one step, and lifted the TP for MiniMax from HKD990 to HKD1,100, both rated Overweight. The broker also regards Alibaba as its top pick in Chinas internet sector. In its bull case scenario, Morgan Stanley increased its valuation for Zhipu and MiniMax to HKD1,730 and HKD2,480 per share, respectively; in the bear case scenario, valuations were also raised to HKD420 and HKD600 per share, respectively. (hc/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-04-27 16:25.)</div>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.</div>

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Morgan Stanley anticipates that the annual recurring revenue (ARR) for frontier models will reach at least USD 1 billion by year-end, driven by advancements in US computing power and Chinese engineering efficiency. The firm raised price targets for MiniMax and Zhipu, forecasting significant growth in the sector. By 2026, ARR could reach USD 1 billion to USD 1.5 billion, expanding to USD 2.5 billion to USD 5 billion by 2027. Key picks include MiniMax, Zhipu, and Alibaba, with increased valuations in both bull and bear scenarios.

- Morgan Stanley's report indicates that foundation models are growing due to US computing power and China's engineering efficiency.  
- The firm anticipates annual recurring revenue (ARR) for frontier models to reach USD 1 billion to USD 1.5 billion by the end of 2026, potentially expanding to USD 2.5 billion to USD 5 billion by the end of 2027.  
- Key stock picks include MiniMax, Zhipu, and Alibaba, with upgraded target prices reflecting increased valuations in both base and bull cases.

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M Stanley Expects Frontier Models ARR to Reach at Least USD1B by Year-end, Raises TPs on MiniMax  and Zhipu