GOLDEN SUN SECURITIES·2025-07-20 06:54Investment Rating - The report maintains a "Buy" rating for key companies in the computing power industry chain, specifically recommending leading companies in the optical module sector such as Zhongji Xuchuang and Xinyi Sheng [3][8][26]. Core Insights - The computing power industry is experiencing a significant surge, driven by multiple factors including the strong performance of major companies like Nvidia, which has reached a market capitalization of $4.2 trillion, and the projected capital expenditures (Capex) of over $300 billion by major cloud service providers (CSPs) in 2025 [1][21]. - The report identifies four key milestones in AI technology that are reshaping market perceptions, including the upcoming release of GPT-5, which will support multi-modal inputs, and the introduction of advanced chips like Broadcom's Tomahawk Ultra [2][22]. - There is a growing recognition of the rigid demand for computing power, with significant investments and user willingness to pay for AI services, indicating a robust market outlook despite concerns about Capex sustainability and ROI [3][27]. Summary by Sections Market Dynamics - The computing power sector has seen explosive growth, with Zhongji Xuchuang's market value surpassing 200 billion yuan and Xinyi Sheng achieving a 39% weekly increase in market value [1][16]. - The optical communication index has outperformed other sectors, with a 16.9% increase, reflecting strong investor sentiment and performance in the optical module market [17][20]. Key Milestones - AI technology is transitioning towards multi-modal capabilities, with significant hardware upgrades and increased penetration rates [2][22]. - Major CSPs have revised their Capex expectations upwards, confirming the high demand for computing power [22]. Investment Opportunities - The report emphasizes the importance of the optical communication sector as a critical component of AI infrastructure, suggesting that companies like Zhongji Xuchuang and Xinyi Sheng will benefit from this trend [8][26]. - It also highlights the potential of domestic computing power supply chains, particularly in liquid cooling technologies [26][27]. Company Performance - Zhongji Xuchuang and Xinyi Sheng are highlighted as key players, with projected earnings per share (EPS) growth and favorable price-to-earnings (PE) ratios indicating strong future performance [11][14]. - The report notes that the market is shifting towards value investment in high-performing companies, moving away from high-risk classifications [25].