Investment Rating - The report presents a positive outlook on the AI Capex sector in China, with specific stock recommendations for various segments including copper, power equipment, humanoid robots, autonomous driving, and smart manufacturing [9][10][47]. Core Insights - China's AI Capex is expected to reach RMB600-700 billion by 2025, driven by government policies and increased spending from major telecom and internet firms [1][29]. - The report emphasizes the importance of non-IT and energy-related AI Capex, focusing on the value chain that includes power, metals, and applications [1][29]. - Significant growth is anticipated in various applications of AI, including humanoid robots, autonomous driving, and smart manufacturing, with respective CAGRs of 171%, 52%, and 2.4% from 2024 to 2030 [40][44][42]. Summary by Sections AI Capex Overview - China's AI Capex is projected to rise significantly, reaching RMB600-700 billion by 2025, supported by government initiatives and major industry players [1][29]. - The global data center investment is expected to grow to US$800 billion by 2030, with China playing a crucial role [1][29]. Power and Power Equipment - China's data centers are forecasted to consume 277 TWh of electricity by 2030, representing 2.2% of total power demand [30]. - The power equipment market related to AI is expected to grow at an 18% CAGR from 2024 to 2030, driven by strong grid investments and rising demand from renewable energy [31][32]. Copper and Other Metals - Data centers are projected to account for 4-6% of China's copper demand by 2030, with total copper demand from data centers estimated at 675-1,048 kt [33]. - The report highlights the tight global copper supply and the expected increase in aluminum demand due to AI and energy transitions [34]. Cooling and Power Supply - The liquid cooling market for data centers is expected to grow at a 57% CAGR from 2024 to 2030, driven by its efficiency compared to air cooling [36][37]. - Diesel engine demand for data centers is projected to increase by 50% YoY in 2025, with a market size of RMB11 billion [39]. Humanoid Robots - Humanoid robot shipments are expected to grow at a CAGR of 171% from 2024 to 2030, with global sales projected to reach 1 million units by 2030 [40]. - The BOM cost of humanoid robots is anticipated to decline significantly, making them more accessible [40]. Smart Manufacturing - The smart manufacturing sector is expected to recover with a 2.4% YoY growth in 2025, driven by automation and AI integration [42]. - The report identifies Inovance as a key player in the industrial automation market [42]. Autonomous Driving and eVTOL - The global LiDAR market is projected to reach RMB80 billion by 2030, with a CAGR of 52% from 2024 to 2030 [44]. - The eVTOL market is expected to grow from RMB1 billion in 2024 to RMB10 billion by 2030, with a CAGR of 63% [45]. Smart Home - The smart home market in China is expected to grow at an 11% CAGR from 2024 to 2030, driven by advancements in IoT and AI technologies [46].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies [1]. Core Insights - The report highlights a tentative US-China détente following a call between Trump and Xi, with discussions on trade and potential sanctions [1]. - The HSCEI index increased by 2.5% and the CSI 300 by 0.9% during the week [1]. - China is considering a RMB500 billion investment to accelerate infrastructure projects in AI, digital economy, and consumption [1]. - The report notes that the IT, Communication Services, and Broadline Retail sectors outperformed, while Industrials, Consumer Staples, and Energy sectors underperformed [1]. Key Themes Update - The report identifies key themes in the China market, focusing on index-heavy stocks with high dividend yields and local champions expanding globally [12]. - High yield stocks listed include CCB, ICBC, and PetroChina, with dividend yields ranging from 5.1% to 7.1% [12]. - Local champions going global include companies like BYD and Great Wall Motor, which are less impacted by US/EU tariffs [12]. Market Movements and Capital Flows - The report indicates that the A-share market saw a 22.9% year-over-year increase in new account openings in May [3]. - Preliminary data shows that May passenger vehicle wholesales increased by 14% year-over-year, with NEV sales up by 38% [3]. Earnings Revisions - The report does not provide specific details on earnings revisions for the industry or companies [1]. Recovery Trends - The report notes that the top 100 developers' home sales decreased by 8.6% year-over-year in May [3]. - Average new home prices in 100 cities increased by 0.3% month-over-month in May, while secondary home prices decreased by 0.7% [3]. Key Events - The report mentions that the US made tough requests to Vietnam in trade talks, including reducing reliance on Chinese industrial goods [2]. - The PBOC is set to inject RMB1 trillion via outright reverse repos in June [2]. Key News - The report highlights that the EU voted to limit China's access to its medical device procurement [1]. - China is reportedly considering a major deal to order hundreds of Airbus jets during EU leaders' visit [1].

Accessible version The Flow Show The Bros, the Base & the Billionaires Scores on the Doors: gold 27.7%, stocks 6.7%, govt bonds 6.1%, IG 5.8%, HY bonds 5.0%, cash 1.8%, commodities -1.7%, US dollar -8.9%, crypto -10.0%, oil -12.4% YTD. "Bro Billionaire" stocks*vs the Base stocks (Russell 2000, RHS) Source: BofA Global Investment Strategy, Bloomberg Trump election +45% since election -7% 1700 1900 2100 2300 2500 2700 2900 3100 3300 5000 6000 7000 8000 9000 10000 11000 12000 13000 Jun'24 Aug'24 Oct'24 Dec'24 ...

Investment Rating - The report does not explicitly state an investment rating for the healthcare sector in China, but it indicates a positive sentiment towards the sector due to recent stock price increases and license-out deals [1][2]. Core Insights - The surge in China biotech and pharma stock prices, with the Hang Seng Healthcare Index (HSHI) rising approximately 40% year-to-date, is attributed to significant license-out deals and external macroeconomic factors rather than internal improvements [1][2]. - Investors have polarized views on the sustainability of the recent rally, with some attributing it to external changes in the macro environment, particularly in the US healthcare policy landscape [2][3]. - There is a divergence in investor sentiment regarding license-out deals, with some viewing them as one-off events while others are optimistic about continuous outbound deals from Chinese biotech and pharma companies [3][4]. Summary by Sections Industry Overview - The healthcare sector in China has experienced a notable increase in stock prices since the beginning of 2025, driven by significant license-out deals and macroeconomic shifts [1]. Investor Sentiment - Investors are divided on the reasons behind the stock price rally, with many attributing it to external macroeconomic factors rather than improvements within the Chinese healthcare sector [2]. - Concerns exist regarding the sustainability of license-out deals, with some investors cautious about potential equity financing and the consistency of license income [3]. Fund Manager Perspectives - Generalist fund managers who missed the recent rally are now looking to participate, viewing biotech and pharma firms as a safe haven amid changing macro dynamics [4]. - There is a contrast between bullish investors, who are not concerned about current elevated valuations, and bearish investors, who prefer healthcare laggards with stable revenue growth and dividend payouts [4].

Investment Rating - The report indicates a bullish sentiment towards NVIDIA and its leadership in the inference market, particularly with the introduction of DeepSeek, which is expected to significantly expand the inference revenue pool [1][2]. Core Insights - NVIDIA is positioned as a leader in the inference market, with the DeepSeek model democratizing reasoning capabilities and potentially increasing token consumption per user by 13-20 times, leading to a twenty-fold expansion in the inference revenue pool [1]. - The GB200 architecture is designed for multi-GPU reasoning, transforming training chips into inference workhorses, which aligns with the growing demand for long-context inference [2]. - The report emphasizes that inference is eclipsing training in profit potential, prompting a shift in cloud capital expenditure towards sustained demand for accelerators [2]. - Open-source acceleration through DeepSeek is expected to optimize future models for NVIDIA's NVLink from inception, reinforcing its platform advantage [3]. - A breakthrough in combining Mixture-of-Experts with MLA compression technology is noted, which reduces memory usage while maintaining accuracy, thus bending the cost curve for large language models (LLMs) [4]. Summary by Sections NVIDIA - The DeepSeek model is a significant catalyst for expanding reasoning capabilities, with a model size of 671 billion parameters that enhances user engagement and revenue potential [1]. - The GB200 architecture is tailored for multi-GPU reasoning, enhancing NVIDIA's position in the inference market [2]. - The report highlights the shift in profit pools from training to inference, indicating a robust future for NVIDIA's cloud services [2]. - Open-source initiatives are expected to solidify NVIDIA's competitive edge by ensuring new models are optimized for its technology [3]. - Innovations in memory compression techniques are set to lower costs while preserving performance in LLMs [4]. ServiceNow - ServiceNow is experiencing tangible AI successes, with significant transformations in major accounts demonstrating real value [5]. - The company is rapidly monetizing its AI capabilities through Pro Plus and turnkey agents, indicating a shift in market perception of AI as essential [6]. - Federal revenue growth of 30% year-over-year showcases the strength of ServiceNow's vertical strategies [7]. - The company has engaged with over 40 Fortune 500 companies in AI design sessions, indicating strong demand for its services [7]. Twilio - Twilio's focus on AI-driven efficiency and high-margin products is expected to sustain margin growth [8]. - The company has achieved a significant increase in operating margins, with automation and AI expected to further enhance operational leverage [9]. - New software-centric products are projected to improve gross margins over time [10]. - Twilio's strategy emphasizes partnerships over building proprietary models, allowing for rapid deployment of AI solutions [11]. Booking Holdings - Booking Holdings aims for over 8% growth in bookings and revenue, with a focus on alternative accommodations outpacing traditional hotels [14][15]. - The company has successfully expanded into the flight booking sector, demonstrating rapid growth potential [35]. - Attractions revenue has surged by 92% year-over-year, indicating strong market demand [36]. Microchip Technology - Microchip Technology expresses optimism in the analog sector, supported by record bookings and backlog growth [16]. - The company has raised its revenue and EPS guidance based on strong demand data [17]. - Inventory management strategies are in place to recover gross margins to targeted levels [17][20]. Cisco Systems - Cisco Systems is positioned for a durable growth cycle, with a focus on disciplined spending and transparency [27]. - The company reports steady demand despite tariff concerns, with significant year-over-year growth in product bookings [28]. - Cisco is capitalizing on a multi-year AI networking cycle, with opportunities in various sectors [29].

Investment Rating - The report upgrades the Energy sector to overweight amid record neglect and highlights potential benefits from provisions for domestic manufacturers in the tax bill [10][11][12]. Core Insights - Institutional clients have been the biggest net sellers of US equities, while private clients have returned to buying, marking a significant shift in client behavior [10][11][12]. - Energy stocks have seen the longest recent buying streak, with net buying for the last six weeks, contrasting with significant outflows in the Technology sector [10][11][12]. - The report notes that clients sold US equities for the first time in five weeks, primarily driven by institutional and hedge fund selling, while retail clients continued to buy [10][11][12]. Client Flow Trends - Institutional clients sold a net of $2.59 billion in equities last week, while private clients bought $0.84 billion [10][11][12]. - Hedge funds were net sellers for the first time in three weeks, with a total outflow of $1.48 billion [10][11][12]. - Retail clients have been net buyers in 24 of the past 25 weeks, indicating strong retail interest in equities [10][11][12]. Sector Performance - The Technology sector experienced the largest outflows, with net selling of $1.79 billion, while the Energy sector saw inflows of $0.32 billion [10][11][12]. - Health Care and Real Estate also faced significant selling pressure, while Communication Services ETFs recorded the biggest inflows [10][11][12]. ETF Trends - Clients sold equity ETFs for the first time in five weeks, with a notable shift from Blend/Growth ETFs to Value ETFs [10][11][12]. - Large-cap ETFs saw inflows, while Small/Mid-cap and Broad Market ETFs experienced outflows [10][11][12]. Market Capitalization Insights - Large-cap stocks saw significant outflows of $1.92 billion, while Small and Mid-cap stocks recorded inflows [10][11][12]. - The report indicates a trend where institutional clients are favoring Mid-caps over Large-caps [10][11][12].

Investment Rating - The report indicates a bullish outlook for gold and international equities, while suggesting caution for US equities and bonds [2][16][21]. Core Insights - The US dollar is expected to enter a bear market, which is likely to benefit gold and emerging market (EM) equities [2][21]. - Defensive sectors such as healthcare, utilities, and staples are currently at their lowest representation in the S&P 500 since 2000, indicating a potential shift in market dynamics [3][11]. - The "Magnificent 7" stocks are trading at a trailing P/E of 42x, which is below the historical average for equity bubbles, suggesting potential for further upside [17][36]. Summary by Sections Market Performance - Year-to-date performance shows gold at 25.4%, stocks at 5.6%, and commodities at -3.2%, with crypto down 7.5% [1]. - Significant inflows have been observed in bonds ($19.3 billion) and gold ($1.8 billion), while equities experienced a notable outflow of $9.5 billion [12][46]. Sector Analysis - The report highlights a barbell strategy for investment, recommending long positions in the "Magnificent 7" and international value stocks to hedge against potential market corrections [3][15]. - Private clients are increasingly favoring defensive sectors, with a notable shift towards utilities and staples [15][51]. Foreign Investment Trends - Foreign investors have purchased approximately $350 billion in US equities and $200 billion in US bonds since 2020, with 2025 projected to see strong inflows into US stocks [14][28]. - Inflows into EM equities have been robust, with the biggest inflow of 2025 recorded at $2.0 billion [42]. Economic Indicators - The BofA Bull & Bear Indicator has risen to 4.2, indicating a bullish sentiment in the market [9][15]. - The report suggests that the US manufacturing sector now constitutes only 8% of total nonfarm payrolls, reflecting a significant shift in the labor market [19][20].

Investment Rating - The report recommends a "Buy" rating for select stocks that align with the "HAPPI" themes, indicating a positive outlook for these investments [60]. Core Insights - The Chinese market has outperformed year-to-date, driven by low positioning, potential policy support, and a large domestic market, but the absolute upside may be limited due to high valuations [8][12]. - Consumer confidence remains low, with challenges in the economy and consumption growth, particularly in traditional sectors [2][12]. - The report emphasizes a barbell strategy, suggesting defensive investments in high-yield state-owned enterprises (SOEs) and growth stocks focused on domestic consumption for alpha generation [8][12]. Summary by Sections Finding Alpha in a Range-Trading Market - The MSCI China Index has risen mid-teens percentage year-to-date, outperforming global peers, but is near its valuation ceiling at 11.2x P/E [8][10]. - A barbell strategy is recommended, combining high-yield SOEs and domestic-focused growth stocks [8]. Overall Consumption Still Challenged - Retail sales of consumer goods grew by 4.7% YoY in 4M25, up from 4.1% in 4M24, but consumer confidence remains low due to high youth unemployment and deflationary pressures [17][22]. - The property market is showing signs of weakness, and competition in consumer sectors is fierce [2][12]. Generating Alpha from "HAPPIness" - The report highlights the "HAPPI" themes: Health & wellness, Affordable, Pragmatic, Personal/emotional value, and Intellectual Property [6][36]. - Stocks with clear value propositions in these areas are preferred over large-cap premium brands [36]. Consumer Goods and Services - The food and beverage sector is under pressure, but selected companies are seeing growth driven by health trends and product innovation [62]. - The beverage industry, particularly energy drinks and health-focused products, is outperforming traditional alcoholic beverages [38][62]. Key Stocks - Notable stocks include Anta, Eastroc, Feihe, and Pop Mart, all of which align with the "HAPPI" themes and show strong growth potential [60][61].

Investment Rating - Investment Rating: BUY with a Price Objective (PO) of $180.00, current price at $134.81 [1][6] Core Insights - The report highlights NVIDIA's long-term earnings potential with an estimated EPS of $10 by FY28, driven by strong data center sales and a significant total addressable market (TAM) of $325-$350 billion, potentially reaching $450-$500 billion [2][9] - NVIDIA's free cash flow (FCF) margins are noted at 50%, significantly higher than the industry average, indicating strong financial health and operational efficiency [2][9] - The company is experiencing a recovery in gross margins, expected to return to mid-70s percentage later in the year, reflecting improved demand and execution in rack-scale systems [1][2] Summary by Sections Financial Estimates - FY26E EPS is raised to $4.21, FY27E to $5.87, and FY28E to $7.23, reflecting increases of 6%, 2%, and 12% respectively [1][16] - Revenue estimates for FY26E, FY27E, and FY28E are adjusted to $195,750.5 million, $252,857.3 million, and $301,855.0 million, respectively [5][16] Market Outlook - The global accelerator market is projected to reach approximately $300 billion by CY27 and $400-500 billion by CY30, with NVIDIA expected to maintain over 80% market share [13][15] - NVIDIA's data center sales are forecasted to grow significantly, with a projected increase from $47.5 billion in CY23 to $115.2 billion in CY24 [13] Competitive Positioning - NVIDIA is positioned favorably compared to peers, trading at a PEG ratio of 0.9x versus an average of 3.0x for other major companies, indicating potential undervaluation [15] - The company has successfully transformed from a traditional graphics chip vendor to a leader in high-end gaming, enterprise graphics, and accelerated computing markets [9][8]

Investment Rating - The report maintains a "BUY" rating for Xiaomi Corporation with a price objective (PO) of HK$66, up from HK$63 [4][8]. Core Insights - Xiaomi's 1Q adjusted earnings were CNY10.7 billion, exceeding BofA estimates and consensus by 5% and 18% respectively, reflecting a 28% quarter-over-quarter (QoQ) increase and a 65% year-over-year (YoY) increase [1][16]. - The company is focusing on enhancing its smartphone mix and expanding its home appliance segment, with a target to rank No.3 in China by 2025 [2][12]. - Management is optimistic about electric vehicle (EV) demand, having shipped 76,000 EVs in 1Q with a gross margin of 23.2%, while supply remains a key bottleneck [3][12]. Summary by Sections Financial Performance - 1Q sales were CNY111 billion, in line with estimates, showing a 2% QoQ increase and a 47% YoY increase, with a gross margin of 22.8% [1][16]. - Adjusted net income for 2025 is projected to be CNY36.2 billion, reflecting a 24.1% increase from 2024 [19][20]. Business Segments - The gross margin for IoT products increased to 25.2%, while large home appliances saw a 65% YoY increase in shipments, driving a 114% YoY revenue increase in 1Q [2][17]. - The EV segment is expected to see shipments rise to 370,000 units by 2025, up from previous estimates of 350,000 units [3][34]. Valuation and Estimates - The report raises 2025-2027 adjusted earnings estimates by 12-23%, with a new price objective based on a sum-of-the-parts (SOTP) valuation of HK$66, comprising HK$30 for core business and HK$36 for the EV business [4][15]. - The adjusted EPS for 2025 is now estimated at CNY1.40, up from CNY1.12, indicating a significant upward revision [19][20].