Core Insights - The report identifies liquid cooling as a strategic investment opportunity, potentially replicating the success of optical modules and PCBs, with strong growth prospects driven by AI computing needs and stringent energy efficiency standards [2][3] - Liquid cooling is characterized by three main features: strong growth, complete narrative, and favorable odds, indicating a favorable market environment for investment [2] - The industry is transitioning from speculative hype to a high-growth phase with confirmed orders, as evidenced by significant order increases from key suppliers like Vidi Technology [3] Industry Trends - The liquid cooling industry is entering a high-growth phase with a 252% year-over-year increase in organic orders reported by Vidi Technology, highlighting strong market demand [3] - Major tech companies like NVIDIA and Google are adopting liquid cooling as a mandatory standard for their next-generation platforms, indicating a shift from optional to essential technology in AI computing [3] - The industry is witnessing a wave of mergers and acquisitions, with companies like Liying Intelligent Manufacturing acquiring liquid cooling suppliers to secure positions in the AI server supply chain [3] Liquid Cooling Industry Chain - The liquid cooling industry chain consists of three main segments: upstream components, midstream system integration and manufacturing, and downstream applications [4] - Upstream includes key technologies and components such as cooling fluids and CDU, which have high technical barriers and value [4] - Midstream integrates upstream components to provide complete liquid cooling server solutions, with technical integration capabilities as a core barrier [4] - Downstream focuses on high-performance data center operators and industry users driving the large-scale adoption of liquid cooling [4]

Group 1 - Nvidia leads the gains among the tech giants, rising by 0.6% [1] - Amazon increased by 0.5%, Alphabet by 0.4%, and Meta by 0.3% [1] - Microsoft and Tesla both saw a rise of 0.2%, while Apple experienced a decline of 0.3% [1] Group 2 - US stock futures showed a slight increase after a volatile trading day [1] - Real estate service stocks were impacted negatively during the latest round of "AI panic" trading [1]

Core Insights - Lumentum (LITE) reported exceptional financial results for the December quarter, significantly exceeding estimates and showcasing strong growth potential in optical components and systems [1][2]. Financial Performance - Non-GAAP earnings reached $1.67 per share, surpassing the Zacks Consensus Estimate by 18.68% and marking a nearly 300% increase year-over-year [1][9]. - Non-GAAP revenues totaled $665.5 million, exceeding consensus by 1.85%, with a sequential increase of 24.7% and a year-over-year growth of 65.5% [1][9]. Segment Contributions - The Components segment accounted for 66.7% of total revenues, growing 68.3% year-over-year to $443.7 million, while the Systems segment contributed 33.3% with a 60.1% year-over-year increase to $221.8 million [3]. Future Guidance - For Q3 fiscal 2026, LITE anticipates non-GAAP revenues between $780 million and $830 million, significantly higher than the previous consensus of around $700 million [4]. - The company expects non-GAAP operating margins of 30% to 31%, compared to prior expectations of 22%, and diluted earnings per share between $2.15 and $2.35, up from under $1.60 [4]. Growth Projections - The full-year 2026 sales consensus has risen to $2.9 billion, indicating over 76% annual growth, with FY'27 projected at approximately $4.7 billion, reflecting a 61.5% increase [6]. - EPS estimates for FY26 have increased from $5.67 to $7.63, and for FY27 from $8.29 to $14.11, representing growth rates of 270% and 85%, respectively [6]. Market Dynamics - The demand for optical interconnect solutions is being driven by NVIDIA's advancements in GPU architectures, which are increasingly reliant on optical technologies [2][10]. - Lumentum's collaboration with Taiwan Semiconductor (TSMC) is crucial for developing co-packaged optics (CPO), addressing power and heat challenges in AI clusters [13][14].

Core Viewpoint - Micron has officially launched the shipment of its sixth-generation High Bandwidth Memory (HBM4), breaking the expectation that Samsung and SK Hynix would dominate the supply chain for NVIDIA's upcoming AI accelerator, "Vela Rubin" [1]. Group 1: Micron's HBM4 Production and Market Position - Micron's CFO, Mark Murphy, announced that the company has entered the mass production phase of HBM4 and has begun shipping to customers [1]. - Murphy addressed recent rumors regarding HBM4's exit from the market, stating that the shipment volume is expanding smoothly and is ahead of the previously mentioned timeline by one quarter [1]. - The production capacity for HBM is steadily increasing as planned, with Micron's HBM capacity for 2026 already sold out, and the yield for HBM4 meeting expectations, providing speeds over 11Gbps [1]. Group 2: Competitive Landscape - Prior opinions suggested that Micron's HBM4 could not meet NVIDIA's requirement of over 11Gbps, placing it at a disadvantage against Samsung and SK Hynix in the supply competition [1]. - SemiAnalysis projected that SK Hynix and Samsung would capture 70% and 30% of the supply chain for NVIDIA's Vela Rubin, respectively [2].

Group 1 - Nvidia is a leading player in the AI wave, dominating the market with its GPU architecture and CUDA ecosystem, which are crucial for AI training and inference [1] - The rise of Nvidia is not an isolated event; it is part of a complex ecosystem involving wafer manufacturing, advanced packaging, storage bandwidth, network interconnects, power and cooling, materials, and equipment [1] - The AI infrastructure competition has shifted from a focus on computing power to overcoming connectivity bottlenecks, highlighting the importance of interconnect technologies [8] Group 2 - Credo, a lesser-known company, has seen its stock price surge due to its active electrical cables (AEC) that are essential for connecting GPUs in large AI data centers [2][4] - Credo holds an 88% market share in the AEC market, with revenues expected to double again by 2026, reaching nearly $1 billion [4] - The demand for optical fibers is increasing as they offer superior speed and energy efficiency compared to copper cables, with Corning emerging as a key player in this market [5][7] Group 3 - Lumentum is transitioning from a telecom supplier to a core enabler for AI data centers, with significant revenue growth driven by strong demand for optical devices [11][13] - Coherent is also innovating in the optical transceiver space, with a focus on high-speed devices that are essential for AI and machine learning applications [15] - SiTime specializes in precision clocks that are critical for synchronizing AI servers and networks, experiencing substantial revenue growth due to increased demand from data center clients [19][21] Group 4 - The supply chain supporting Nvidia's empire is both powerful and fragile, characterized by high technical barriers and single-point dependencies [27][28] - Companies like Corning, SiTime, and Nittobo are crucial for the reliability of AI systems, with their products being essential for maintaining system performance under extreme conditions [26][25] - The future of these companies is uncertain, as they face potential demand fluctuations and the risk of supply chain disruptions [27][28]

Investment Rating - The report maintains a "Recommended" rating for Pengding Holdings (002938) with a target PE of 30x for 2025E and 24x for 2026E, while other companies like Shenghong Technology (300476) and Shengyi Technology (600183) do not have a specific rating [3]. Core Insights - North American cloud vendors are experiencing a significant increase in capital expenditures, driven by AI demand, with total capital expenditures projected to rise from approximately $160 billion to about $450 billion from 2023 to 2025, indicating a strong alignment between capital expenditure growth and AI computing demand [9][25]. - The NPO (Near-Photonics Optics) and CPO (Co-Packaged Optics) technologies are gaining traction in the industry, providing substantial growth opportunities for domestic optical communication companies [31][46]. - The report emphasizes the importance of scalable optical modules in future cloud infrastructure, with NPO currently favored by domestic cloud vendors due to its advantages in interconnect density and cost [34][36]. Summary by Sections North American Cloud Vendors' Financial Performance - Microsoft reported Q4 FY26 revenue of $81.273 billion, a year-over-year increase of 16.72%, with a net profit of $38.458 billion, up 59.52% [12]. - Google achieved Q4 FY25 revenue of $113.828 billion, a 17.99% increase year-over-year, with a net profit of $34.455 billion, up 29.84% [16]. - Amazon's Q4 FY25 revenue reached $213.386 billion, a 13.62% increase year-over-year, with a net profit of $2.1192 billion, up 5.93% [20]. - Meta's Q4 FY25 revenue was $59.893 billion, a 23.78% increase year-over-year, with a net profit of $22.768 billion, up 9.26% [21]. Capital Expenditure Outlook for 2026 - Google is expected to have a capital expenditure of $175-185 billion in 2026, representing a year-over-year increase of 97% [25]. - Meta's capital expenditure is projected to be in the range of $115-135 billion for 2026, indicating a 77% increase year-over-year [27]. - Amazon's capital expenditure for 2026 is estimated at around $200 billion, a 50% increase from previous estimates [20]. NPO and CPO Technology Developments - NPO technology is gaining popularity among cloud vendors due to its high interconnect density and cost-effectiveness, making it suitable for distributed scale-up networks [34][36]. - CPO technology, which integrates optical engines and switching chips, is being actively promoted by NVIDIA and is expected to replace traditional pluggable optical modules in the future [37][42]. - The report highlights the significant development space for domestic optical communication companies driven by the advancements in NPO and CPO technologies [31][46].

Group 1 - MSCI announced the inclusion of 37 stocks in the MSCI China Index, including Hesai Technology, which will take effect after the market closes on February 27 [1] - Hesai Technology is the only lidar company included in this adjustment, which is expected to attract significant passive investment funds [1] - According to a report by Citi, Hesai Technology is projected to become the world's largest lidar supplier by 2024, with a monthly production and delivery capacity exceeding 200,000 units [1] Group 2 - In January 2026, Hesai Technology was selected as a lidar partner for NVIDIA's Hyperion 10 platform and has entered the C-sample stage with European automakers, indicating strong overseas market expansion potential [2] - The company has established production partnerships with 22 domestic and international automakers for 120 vehicle models, covering over 40 countries [2] - West Securities forecasts Hesai Technology's total revenue to reach 3.1 billion yuan, 4.8 billion yuan, and 6.1 billion yuan from 2025 to 2027, with corresponding net profits of 370 million yuan, 690 million yuan, and 1.09 billion yuan [2] Group 3 - Hesai Technology has three core competitive advantages: a well-defined management structure among its founders, leading R&D capabilities, and proprietary manufacturing processes [3] - The company was one of the first to propose a chip-based lidar approach, with its AT128 lidar being the first to achieve automotive-grade mass production [3] - Hesai plans to increase its production capacity to 4 million units by 2026, with a new factory in Thailand expected to begin operations in early 2027 [3]

Core Insights - Nvidia insiders have sold over $100 million worth of NVDA stock since the beginning of 2026, indicating a significant level of insider trading activity [1][5] - A senior officer, Jay Puri, has been responsible for approximately 70% of these sales, offloading more than $73 million in January alone [2][5] - The overall pace of insider sales has decreased significantly compared to late 2025, where over $200 million was sold in the last two months [5] Insider Sales Details - Jay Puri, the executive vice president of Worldwide Field Operations, executed two major sales on January 9 and January 23, totaling over $73 million [2] - Colette Kress, the executive vice president and chief financial officer, sold approximately 95,000 shares for just over $17 million between January 13 and February 4 [2] - The first insider sale of 2026 was conducted by Donald Robertson, the principal accounting officer, amounting to $15.2 million [4] Stock Performance - Nvidia stock has shown a 46.07% increase over the past 12 months, but this momentum has slowed to just 5.22% over the last six months [6] - As of the latest press time, Nvidia stock is up only 2.69% in 2026, reflecting a loss of positive momentum [6] Future Outlook - The company's future appears uncertain as it shifts focus from consumer semiconductors to artificial intelligence (AI), which could lead to significant volatility in stock performance [7] - If the AI market continues to grow, Nvidia's stock could see substantial gains, but if the market falters, it risks losing its consumer market share to competitors like AMD and Intel [8]

Core Insights - Runway, an AI video company, has shifted its focus to world models and has secured significant investment from Nvidia and AMD, indicating strong industry confidence in its new direction [1][2][12]. Company Overview - Runway was founded in 2018 by three art students and has undergone two major transformations, leading to a current valuation of $5.3 billion with only 140 employees [1][4]. - The company initially focused on video editing tools, gaining traction with its "green screen" feature, which led to early funding rounds totaling $200 million [6][8]. Recent Developments - Runway completed its Series E funding round, raising $315 million (approximately 2.17 billion RMB) to develop the next generation of world models [2][4]. - The latest funding round was led by General Atlantic, with participation from Nvidia and AMD, reflecting a strong belief in Runway's potential [2][12]. Valuation Growth - Following the recent funding, Runway's post-money valuation nearly doubled to $5.3 billion (approximately 36.58 billion RMB) [4][12]. - The company has seen a steady increase in valuation through its strategic pivots, particularly its entry into generative AI following the launch of ChatGPT [6][8]. Product Evolution - Runway's product evolution includes the introduction of the Gen-1 and Gen-2 models, with Gen-2 being the first commercially viable text-to-video model [8][10]. - The company has recently launched the GWM-1 (General World Models-1), which allows for interactive control and real-time image generation, marking a significant advancement in its technology [10][12]. Industry Context - The world model technology is gaining traction across various sectors, including autonomous driving, with companies like Tesla and Waymo developing their own models [13][17][22]. - Nvidia's investments in Runway and other companies utilizing world models highlight the growing importance of this technology in the AI landscape [12][22].

Core Viewpoint - Lenovo Group reported its Q3 performance for FY2025/26 and emphasized the importance of long-term partnerships in driving business growth [1] Group 1: Business Partnerships - Lenovo has established partnerships with various manufacturers, achieving collaboration scales in the range of billions of dollars [1] - The partnership with NVIDIA has seen significant growth, with business scale increasing from $1 billion to approximately four times that amount over the past three to four years [1] - Lenovo aims to achieve a similar fourfold increase in its business scale with partners over the next few years [1]