NORTHEAST SECURITIES·2025-12-08 02:10Investment Rating - The report maintains an "Outperform" rating for the communication industry [5] Core Insights - The communication sector showed strong performance with a 3.69% increase in the Shenwan Communication Index during the week of December 1-7, 2025, outperforming major indices [13][16] - Credo's FY26Q2 financial results demonstrated significant growth, with revenues reaching $268 million, a year-on-year increase of 272.1% and a quarter-on-quarter increase of 20.2%, indicating robust demand in AI infrastructure [23][24] - Marvell announced a strategic acquisition of Celestial AI for $3.25 billion, aiming to enhance its capabilities in AI and cloud data center interconnects [29][30] - AWS launched the new Trainium 3 chip, which offers significant performance improvements and announced plans for the upcoming Trainium 4 chip, enhancing its competitive position in the AI chip market [33][34] - Meta is shifting its focus from the metaverse to AI and AR, planning to cut its metaverse budget by 30% in 2026 to reallocate resources towards AI-related projects [38][39] Summary by Sections Market Review - The communication sector ranked second among 31 Shenwan primary industries, with notable increases in sub-sectors such as communication network equipment (5.67%) and communication cables (3.53%) [16][19] Industry Dynamics - Credo's Financial Performance: Credo's revenue growth is driven by its AEC and IC segments, with significant contributions from major data center clients [23][24] - Marvell's Acquisition: The acquisition of Celestial AI is expected to bolster Marvell's position in the AI interconnect market, with anticipated revenue contributions starting in FY2028 [29][31] - AWS's Chip Launch: The Trainium 3 chip features a 4x speed increase and enhanced memory capacity, positioning AWS favorably against competitors [33][34] - Meta's Strategic Shift: Meta's budget cuts in the metaverse sector reflect a strategic pivot towards AI and AR technologies, indicating a significant resource reallocation [38][40]