GOLDEN SUN SECURITIES·2025-08-31 10:32Investment Rating - Maintain "Buy" rating for the optical communication sector, particularly for leading companies like Zhongji Xuchuang and Xinyi Sheng [4][11]. Core Insights - The report emphasizes the ongoing expansion of AI computing power globally, driven by Nvidia's strong financial performance, which enhances the valuation of upstream optical modules and related industries [8][21]. - The Chinese overseas computing power supply chain is transitioning from "performance realization" to "expectation amplification," indicating a secondary market rally [3][8]. - The optical communication industry is poised for a new growth opportunity due to technological iterations and demand upgrades, particularly in the context of the Scale-up trend [21][24]. Summary by Sections Investment Strategy - Focus on the optical communication sector, recommending companies such as Zhongji Xuchuang, Xinyi Sheng, and Tianfu Communication, among others [9][14]. Market Review - The communication sector has seen an increase, with the optical communication index performing the best, showing a rise of 29.5% [19][20]. Key Developments - Nvidia's recent financial results have reinforced expectations for AI expansion, with Q2 revenue reaching $46.7 billion, a 56% year-on-year increase [25]. - The data center segment is experiencing robust growth, with revenues of $41.1 billion, reflecting a 56% year-on-year increase [25]. - The importance of networking is highlighted, with optical interconnects expected to be a key technology supporting the Scale-up architecture [25][26]. Performance Realization - Leading optical module companies have reported significant growth, with Xinyi Sheng's revenue increasing by 282.64% year-on-year and net profit by 355.68% [26]. - The global market for Ethernet optical modules is projected to exceed $30 billion by 2030, with nearly $20 billion attributed to AI clusters [26][6]. Structural Opportunities - The report identifies structural opportunities in optical fibers and cables, particularly in high-density short-distance applications [27]. - Innovations such as hollow-core fibers are being piloted, with Microsoft planning to deploy 15,000 kilometers of hollow-core fiber within two years [27]. Recommendations - The report continues to favor the computing power sector, recommending investments in leading optical module companies and related firms in the domestic computing power supply chain [8][28].