Hua Er Jie Jian Wen·2026-01-17 03:07Core Insights - The "AI cloud" trade is returning as funds flow back into pure play compute supply-side stocks after a period of volatility since 2026, with CoreWeave up over 40%, Nebius up nearly 30%, and Iren up over 53% [1][5]. Group 1: Market Dynamics - The rebound is driven by improved earnings expectations and upward price movements, with strong signals from the chip sector providing external validation for the "AI cloud" [4]. - Recent performance from TSMC, which exceeded expectations and raised its 2026 capital expenditure forecast, reinforces the view that AI demand is still expanding, alleviating risks associated with the AI cloud service model [4][8]. Group 2: Company Performance - Iren, a vertically integrated digital infrastructure company, is expected to see sales growth of approximately 120% this year and an additional 151% next year, benefiting from rising demand for compute and power from AI and data-intensive workloads [5][7]. - Nebius, positioned as an AI-focused infrastructure and cloud service provider, is projected to experience a staggering 376% sales growth next year due to upward revisions in earnings expectations [7]. - CoreWeave has made significant progress by delivering over 16,000 GPUs by the end of December, recovering from revenue impacts caused by delays in the previous quarter [7][8]. Group 3: Industry Validation - TSMC's record manufacturing yield and capacity expansion provide a solid foundation for new cloud service providers like CoreWeave and Nebius to fulfill their multi-billion dollar backlog orders [8]. - TSMC's gross margin of 62.3% indicates not only industry growth but also high profitability, which helps to alleviate concerns regarding an "AI bubble" [8].