Yes, but only within the bounds of Altitude Priority. To further clarify Altitude Priority, it means that if the distance between the aircraft and the target altitude is further than the distance specified by the Altitude Priority setting (either higher or lower), Autopilot will halt horizontal movement until the gap is closed. For example, if the aircraft is at 50 ft, and the target altitude is 150 ft, and Altitude Priority is set to 49 ft (the default), the aircraft will stop moving horizontally and ascend to 101 ft before then proceeding to move both horizontally and vertically.
In the case of Modes such as Zip Line or Waypoint where there may be two target altitudes (Point A and B are different, or Waypoint 1 and 2 are different), then Altitude Priority applies when the aircraft is below the lower of the two, or above the higher of the two. For example, say the aircraft is flying between two Waypoints, 1 and 2, where Waypoint 1 is at 100 ft, and Waypoint 2 is at 200 ft. While Autopilot will attempt to evenly interpolate the target altitude of the aircraft between the two points, Altitude Priority will not apply as long as the aircraft is at any altitude between 100 and 200 ft while flying that segment. However, if the aircraft is below 100 ft, or above 200 ft at any point on the segment, Altitude Priority could apply, if the difference was greater than 49 ft.
In the case of flying to the first Waypoint, the situation is easier to understand because there are not two points. Again, if the first Waypoint is at 150 ft, and Altitude Priority is 49 ft, then the aircraft will take off and ascend to 101 ft before attempting to fly to the first Waypoint.