Shares of ZTE (HKEX: 00763) are continuing their upward trajectory, rising nearly 5% in a recent session. At the time of writing, the stock was up 3.41% to HK$28.48, with a trading volume of HK$480 million.

The positive movement follows recent company disclosures. In March, during an earnings briefing, ZTE indicated it is deepening its collaboration with major ecosystem partners, including ByteDance. This partnership is focused on jointly advancing the research, development, and commercialization of a new generation of AI-powered smartphones featuring the "Doubao" AI assistant, aligning with the company's "AI for All" strategy.

Analysts at Morgan Stanley have weighed in on the development. They suggest that as investor focus shifts towards a recovery phase and AI-related catalysts re-emerge, ZTE could be poised for a re-rating. The bank views the collaboration with ByteDance on integrating the "Doubao" AI assistant—which combines intelligent agent, multimodal, and system-level AI capabilities into smartphones—as a significant potential driver. Early demand indicators, such as the initial product batch selling out, point to strong market interest.

Morgan Stanley expects ZTE to further deepen this cooperation, potentially paving the way for broader commercialization of AI smartphones. This development is seen as a key catalyst that could positively influence market sentiment and the company's valuation.