HTSC·2025-05-27 02:25Investment Rating - The report maintains an "Overweight" rating for the telecommunications sector [10] Core Insights - The combined capital expenditure of BAT (Baidu, Alibaba, Tencent) for Q1 2025 reached 54.4 billion RMB, representing a year-on-year increase of 105% but a quarter-on-quarter decline of 23% [2][3][15] - The decline in capital expenditure is attributed to the impact of NVIDIA's H20 export restrictions, but the long-term growth trend in capital expenditure is expected to remain intact [2][3][17] - The report suggests focusing on domestic GPU capabilities and related supply chains, including optical modules, AIDC, switches, and copper connections, as they are likely to fill the demand gap created by the restrictions [2][3][17] Summary by Sections Market Overview - The telecommunications index fell by 2.31% last week, while the Shanghai Composite Index and Shenzhen Component Index decreased by 0.57% and 0.46%, respectively [2][14] Key Companies and Dynamics - The report highlights a positive outlook for the AI computing chain in the telecommunications industry for 2025, recommending companies such as Zhongji Xuchuang, Xinyi Sheng, Tianfu Communication, Taicheng Light, and Ruijie Network [4] - Core asset value reassessment is recommended for China Mobile, China Telecom, and China Unicom, along with a focus on new productivity in satellite internet, low-altitude economy, and deep-sea technology [4] Capital Expenditure Insights - In Q1 2025, Baidu, Alibaba, and Tencent's capital expenditures were 2.9 billion, 24 billion, and 27.5 billion RMB, respectively, with year-on-year growth rates of +42%, +136%, and +91% [3][15] - The report notes that the capital expenditure for Q1 is typically lower than that of Q4 in previous years, indicating a seasonal trend [17] Recommendations - The report recommends a focus on companies involved in the domestic GPU supply chain and related industries due to the anticipated growth in AI applications and infrastructure investments [2][3][17]