AI behaviour has changed somewhat with 1.1, but they usually surrender when you beat them around pretty hard or eradicate any remnants of their fleet (which usually coincides with them having 3 or fewer planets remaining).
I've seen AI's continue to fight even after I've burned their HW and its last capital ship: it just simply relocates its capital and builds another capital ship factory.
Oh, and ever notice with unlocked teams that after an allied victory your computer allies suddenly cut off all relations and turn against you? I've had an AI actually stick to the alliance after everyone else was ground to dust (looking back, I had a ridiculously larger fleet than it did... maybe 2x to 3x the supply... so maybe that played a role).
