JPMorgan has released a research report stating that demand for Chinese artificial intelligence models is currently situated between two demand phases: coding and broader white-collar work, with AI demand beyond coding emerging later than the bank had originally anticipated.
The bank believes the market is overly pessimistic about China's AI model sector, maintains a bullish outlook, and has named Z.AI (02513) as its top pick in the sector.
According to the bank, AI models can be viewed as the next-generation workforce for enterprises, while model companies are akin to schools that train talent. Enterprises select models based on specific capability thresholds, so demand grows in stages. Coding applications developed rapidly in late 2025 as model reliability reached required levels. China currently lags the United States by at least about six months and remains in the coding application phase. The bank expects China to subsequently follow the U.S. in gradually expanding toward broader application areas.
The bank holds that AI model commoditization and pricing power can coexist. Leading model developers can, on one hand, raise prices for top-tier models, while on the other hand attracting price-sensitive users through lower-priced products, and continuously reducing their own inference costs. Z.AI reduced its unit inference cost by about 80% this year under the same hardware conditions, and the gross margin of its open platform and API business rose from negative 0.4% a year ago to 24.6% in the first half of 2026.
JPMorgan believes industry value will concentrate in a small number of companies capable of continuously launching the most cutting-edge models. On company progress, Z.AI launches a new-generation model roughly every two to three months and has already raised its guidance. The bank expects the GLM-5.5/GLM-6 launch in November to become the next catalyst.
MINIMAX-W (00100), meanwhile, focuses mainly on cost-effectiveness. If its M3 Pro launching in November gains market recognition and can be priced in line with frontier models, JPMorgan may adopt a more positive view.
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