Investment Rating - The report maintains a "Positive" investment rating for the electronic industry in China, indicating an expectation of returns exceeding the market benchmark by over 5% [4][12]. Core Insights - The liquid cooling industry is transitioning from an optional solution to a core necessity for AI infrastructure, with market space expected to experience exponential growth. The power consumption of AI clusters has entered the 100kW+ era, necessitating liquid cooling solutions as traditional air cooling systems become inadequate [7]. - The demand for liquid cooling is driven by the rapid growth in AI computing power, with major companies like Meta, Google, and AWS accelerating their deployment of liquid cooling solutions. This trend is expected to extend from servers to network devices [7]. - Domestic manufacturers are poised to capitalize on overseas supply chain opportunities due to their product quality, R&D efficiency, and cost advantages, especially as the industry shifts towards higher power density requirements [7]. Summary by Sections Investment Recommendations and Targets - The report highlights the potential of liquid cooling as a critical component for AI infrastructure, with expectations for sustained order and performance growth. Key companies to watch include Lingyi iTech (002600, Buy), BYD Electronics (00285, Not Rated), Zhongshi Technology (300684, Buy), and Siquan New Materials (301489, Not Rated) [2]. Industry Trends - The liquid cooling sector is transitioning to a demand-driven phase, with significant order growth observed in leading companies. For instance, Vertiv reported a 15% year-over-year increase in orders for Q2 2025, reflecting strong market demand [7]. - The report emphasizes that the liquid cooling market is moving towards a performance-driven stage, with expectations for more companies in the liquid cooling supply chain to see order and performance releases [7].