GOLDEN SUN SECURITIES·2025-06-08 10:58Investment Rating - The report recommends a "Buy" rating for key companies in the computing and optical communication sectors, including Broadcom, Ciena, and several others in the supply chain [11]. Core Insights - The report emphasizes the growing importance of network infrastructure in AI systems, highlighting that the network has become a critical factor in performance optimization, shifting the bottleneck from single-chip computing to node interconnection [2][3]. - It notes that the capital expenditure (Capex) structure for AI infrastructure is increasingly allocating a larger share to networking components, as seen in Meta's deployment of a 24K cluster where network costs exceed one-third of the total computing expenses [3][4]. - The report discusses the long-term trend of ASICs being explored by major companies like Microsoft and Google, suggesting that while ASICs may optimize costs, the reliance on high-performance networking remains essential across all architectures [4][5]. Summary by Sections Section 1: Broadcom - Broadcom reported FY25 Q2 revenue of $15 billion, a 20% year-over-year increase, driven by AI business growth and VMware integration [1]. - The semiconductor solutions segment generated $8.4 billion, with AI business revenue reaching $4.4 billion, up 46% year-over-year [1][22]. - The company projects FY25 Q3 revenue of $15.8 billion, with AI business expected to contribute $5.1 billion [1][22]. Section 2: Ciena - Ciena's FY25 Q2 revenue was $1.13 billion, a 24% increase year-over-year, with a GAAP net profit of $9 million compared to a loss of $16.8 million in the previous year [7]. - The decline in gross margin to 41% from 43.5% is attributed to strong demand for pluggable optical modules, impacting cost pressures [7][29]. - The report suggests that Ciena's reliance on foreign suppliers may affect its cost structure, and a shift back to domestic suppliers could improve margins [29]. Section 3: Industry Trends - The optical communication index outperformed the broader communication sector, with significant gains in companies like Zhongji Xuchuang and Xinyi [18][19]. - The report highlights a notable recovery trend in overseas computing demand, recommending investments in leading optical module companies and related sectors [8][29]. - The communication sector's performance is illustrated by various indices, with the optical communication index rising by 8.9% [21]. Section 4: Investment Recommendations - The report suggests focusing on companies within the computing and optical communication sectors, including Zhongji Xuchuang, Xinyi, and others, as they are well-positioned to benefit from the ongoing demand for AI infrastructure [8][14]. - Specific recommendations include companies involved in optical components, copper links, computing devices, and edge computing platforms [14].