JP Morgan: Z.AI (02513) saw a robust growth in API business in the first half of the year, raising the target price to HK$2,000.

J.P. Morgan released a research report stating that Z.AI (02513) achieved a revenue of 954 million RMB in the first half of the year, representing a year-on-year growth of 400%. The cloud/API business generated a revenue of 825 million RMB, with an astonishing year-on-year increase of 2,736%, which is roughly in line with expectations and now accounts for 86.5% of total revenue. The bank has raised its revenue forecasts for 2026 and 2027 by 14% and 18% respectively, and increased the target price from HKD 1,800 to HKD 2,000, while reiterating an "Overweight" rating. More importantly, updates since June indicate that Z.AI's annual recurring revenue (ARR) reached USD 1.6 billion by August, implying that the revenue for August alone was approximately USD 133 million, surpassing the total API business revenue of USD 123 million (825 million RMB) for the entire first half of the year. The management now expects the year-end ARR to reach USD 2.4 billion, a significant increase from the previous guidance of USD 1 billion. J.P. Morgan continues to be optimistic about Z.AI's positioning in China's large model sector, due to its rapid model iterations, the effective transformation of capability enhancements into paid usage, and continuous improvements in inference capabilities.