Morgan Stanley: MiniMax’s short-term ARR potential is underestimated, with a dense schedule of catalysts in the next three months

The market's expectations for MiniMax’s recent annual recurring revenue (ARR) growth are overly conservative. Morgan Stanley’s latest research report points out that MiniMax’s ARR growth potential is on par with or even stronger than its peers. Its multimodal capabilities, global presence, and infrastructure advantages form core support, which is not yet fully reflected in the current market pricing.

According to the Morgan Stanley report, the bank maintains an Overweight rating for MiniMax, with a target price of HKD 990, about 10% upside compared to the closing price of HKD 898.5 on April 21.

The report believes that MiniMax is expected to achieve its target of $1 billion ARR by the end of 2026, which is equal or superior to the expectations for competitors. Several near-term catalysts exist in the next 2 to 3 months, including the launch of new agent products, flagship model upgrades, API price increases, and potential inclusion in indices.

These judgments are directly relevant for investors. Since April, MiniMax’s stock performance has lagged behind competitor Zhipu/Z.ai by about 40 percentage points. This gap mainly stems from the market’s preference for Z.ai’s programming and agent direction, as well as concerns about the expiration of MiniMax IPO cornerstone investors and some pre-IPO investors’ lock-up period on July 8, rather than substantive differences in fundamentals.

The Market Underestimates Multimodal Commercial Value

The market currently systematically underestimates the commercial potential of MiniMax’s multimodal capabilities. The report points out that large language models (LLM) mainly monetize within intelligent productivity scenarios, while multimodal models cover creative productivity scenarios. The two markets reinforce each other and together form a considerable commercial space.

In terms of model capabilities, MiniMax’s LLM has performed well in multiple agent workflows (such as OpenClaw, Hermes Agent), and has ample exposure in the core token consumption-driven directions of programming and AI agents.

Management revealed that MiniMax’s tokens per minute (TPM) processing volume is currently maintaining a week-over-week growth rate of 10% to 20%, and Morgan Stanley expects this momentum to continue.

Infrastructure Advantages Translate into Excess Unit Economics

Infrastructure capability is a key constraint for ARR growth in AI foundation model companies, and MiniMax has clear advantages in this dimension.

The report shows that MiniMax secures global computing power supply through partnerships with major cloud service providers and is able to access advanced chip resources. Meanwhile, infrastructure optimization enables it to achieve superior unit economics compared to industry peers.

Specifically, MiniMax can achieve approximately $1 per minute revenue on a single 8xH800 inference server, with corresponding costs below $0.3, far superior to the industry average of about $0.5 per minute revenue. This cost structure advantage provides fundamental support for continued improvements in gross margin.

Gradual Price Increase; M3 Release May Trigger New Round of Rises

In pricing strategy, MiniMax has not yet increased input or output API prices, but has raised the prompt cache reading price (per million tokens) from RMB 0.21 in the M2.5 era, by 50%, to RMB 0.42 in the M2.7 era. Morgan Stanley expects the company to drive a new round of price increases with the launch of the M3 model in mid-2026.

M3 is positioned as a major model upgrade with significantly expanded parameters, accompanied by iterations of the video generation model Hailuo-03. Morgan Stanley believes that the synergetic advancement of model upgrades and price hikes will be an important driving force in accelerating ARR growth.

Furthermore, Morgan Stanley compiled several catalysts that may support the stock price in the next 2 to 3 months: first, potential launch of new agent products; second, landing of M3 and Hailuo-03 model upgrades; third, potential API price increases with model launches; fourth, possible inclusion of MiniMax in the Hang Seng Composite Index and Hang Seng Tech Index. The window for these catalysts overlaps with the expiration of the lock-up period on July 8; positive fundamental progress will help hedge against potential selling pressure from the expiration.

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