Soochow Securities·2025-05-18 13:47Investment Rating - The report maintains an "Overweight" investment rating for the electronic industry, indicating a positive outlook for the sector in the next 6 to 12 months [1]. Core Insights - The global AI industry is increasingly focusing on the Middle East, which is expected to boost the demand for global computing chips and infrastructure. The recent lifting of the "AI diffusion rules" by the U.S. government has facilitated significant business agreements between U.S. AI companies and Middle Eastern nations, particularly Saudi Arabia and the UAE [1][2]. - Domestic demand for computing power is on the rise, driven by the ongoing tech competition between China and the U.S. The report emphasizes the need for a self-research approach in the entire computing hardware supply chain to overcome challenges posed by U.S. restrictions [3][8]. - Major Chinese internet companies like Tencent and Alibaba are showing optimistic growth in their AI-related businesses, with significant capital expenditures and revenue growth in AI products. Tencent's capital expenditure reached 27.5 billion yuan, a 91% year-on-year increase, while Alibaba's capital expenditure was 24.6 billion yuan, with a notable 18% year-on-year growth in cloud revenue [3][4]. Summary by Sections Global AI Industry Developments - The U.S. has announced a historic $600 billion investment agreement with Saudi Arabia, which includes a strategic partnership between Saudi AI company Humain and NVIDIA to build an AI factory powered by advanced GPUs [1]. - The UAE has also established a framework for an "AI Acceleration Partnership" with the U.S., which includes significant chip imports and the construction of a 5GW AI data center park [1]. Domestic Market Trends - The report highlights the rapid growth of domestic AI innovation, with companies like Tencent and Alibaba leading the charge. Tencent's AI capabilities have positively impacted its advertising and gaming sectors, while Alibaba's AI-related product revenue has seen triple-digit growth for seven consecutive quarters [3][4]. - The report notes that the demand for computing power is shifting from CPU-based to AI computing, indicating a strong upward trend in revenue growth for AI-related services in the coming quarters [3]. Industry Supply Chain and Challenges - The report identifies key players in the computing hardware supply chain, including companies involved in PCB manufacturing and domestic chip production. It emphasizes the importance of achieving a self-sufficient supply chain to mitigate risks associated with U.S. export restrictions [8][9].