JPMorgan Chase has again downgraded its outlook for Chinese generative AI firm MiniMax, cutting its December 2026 target price to HK$300 from HK$400. This follows an earlier reduction from HK$1,100 to HK$400. The investment bank maintained a Neutral rating on the company, pointing to a permanent 50% discount on MiniMax's M3 model as a clear indicator of weak pricing power. Analysts highlighted that a lack of differentiation accelerates price competition and traffic diversion, despite steady developer traction.
The initial drastic cut from HK$1,100 to HK$400 by JPMorgan occurred after MiniMax's flagship M3 model, launched at roughly twice the price of its predecessor M2.7, was permanently discounted by 50% just one week later. JPMorgan interpreted this as the market rejecting the M3's intended premium. The bank sees this price reduction not as a gesture of goodwill but as evidence of insufficient competitiveness in a market where AI demand still outstrips inference supply.
JPMorgan stressed that MiniMax has not launched a new domestic state-of-the-art (SOTA) model since its M2 iteration, and its pure model capability remains in a catch-up phase compared to competitors. The bank noted that DeepSeek V4 has significantly lowered market-clearing prices for capable AI models, creating pressure on firms like MiniMax. Consequently, MiniMax's M3, after its price cut, operates in the same price range as the DeepSeek series.
Financially, the permanent 50% price reduction for M3 led to a significant downward revision in MiniMax's margin expectations. Adjusted net loss forecasts for 2026–2028 widened from $309 million, $596 million, and $512 million to $432 million, $940 million, and $972 million, respectively. While JPMorgan raised MiniMax's revenue forecasts for 2026–2027 by 34% to 74% due to the company's flexibility in procuring compute capacity, it lowered 2028–2030 revenue forecasts by 5% to 21% due to reduced long-term monetization visibility for non-SOTA LLM vendors. The current target price for MiniMax corresponds to 29x its projected price-to-sales ratio, consistent with providers priced based on anchor benchmarks.
In contrast, JPMorgan maintained an Overweight rating on Zhipu AI, raising its target price to HK$2,000 from HK$1,800. Zhipu's ability to double API prices this year while sustaining usage growth, coupled with its consistent delivery of SOTA models like GLM-5/5.1, demonstrated strong pricing power and justified a premium valuation of 57x its projected 2027 price-to-sales ratio. This divergence highlights JPMorgan's view that in the AI sector, the ability to sustain price increases is a stronger indicator of competitiveness than benchmark scores.
