Core Insights - The domestic GPU sector is gaining significant attention in the capital market, with Muxi Co., Ltd. becoming the second company to go public among the "Four Little Dragons" of domestic GPUs, following Moer Thread [1] - Muxi's debut on the STAR Market saw its stock price surge by 692.95%, making it the most profitable new stock in A-share history, with first-day profits for investors reaching approximately 362,600 yuan [1] - The successful listings of Moer Thread and Muxi are indicative of a burgeoning domestic GPU industry, driven by surging AI computing demand and a strategic push for localized computing power [1][2] Industry Trends - The domestic GPU industry is experiencing a listing boom, with several companies expected to go public by the second half of 2025, driven by increasing demand and favorable policies [2] - The IPO processes for Moer Thread and Muxi have been notably swift, with Moer Thread taking only 158 days and Muxi 170 days from acceptance to listing [2] - The successful IPOs are expected to attract more resources to the domestic GPU sector, enhancing market competition and technological advancement [2] Financial Performance - Despite the rapid growth, many domestic GPU companies are still facing profitability challenges, with losses being common; however, signs of a potential profitability turnaround are emerging [3] - Moer Thread anticipates a net loss of 730 million to 1.168 billion yuan in 2025, while Muxi expects a loss of 527 million to 763 million yuan, indicating a narrowing loss margin [3] - Both companies have outlined timelines for potential profitability, with Moer Thread aiming for profitability by 2027 and Muxi by 2026 [3] Technological Development - The domestic GPU market is characterized by various technological routes, with companies like Moer Thread focusing on full-function GPUs and Muxi emphasizing general-purpose GPUs (GPGPU) [6] - Muxi's upcoming products, including the Xiyun C600 series, are expected to enter risk production by the end of this year and achieve mass production in the first half of 2026 [6] - The rapid iteration of products and the push for high-end market penetration are critical for domestic GPU manufacturers [6] Market Dynamics - The global GPU market is dominated by Nvidia and AMD, with domestic GPUs still lagging in technology; however, the market dynamics are shifting due to increasing demand and policy support [5] - The global GPU market is projected to exceed 1 trillion yuan in 2024, with the Chinese market expected to grow from 142.5 billion yuan in 2024 to 1.34 trillion yuan by 2029, reflecting a compound annual growth rate (CAGR) of 53.7% [5] - The competitive landscape is intensifying, with domestic companies racing to enhance their technological capabilities and market share [9]

Core Insights - China is accelerating its self-reliance in the AI sector, with a significant market opportunity in localized computing power projected to reach $81 billion in the next five years [2][3]. Group 1: Empowerment Layer - The empowerment layer provides the foundational infrastructure for AI development, including semiconductor production, chip design, cloud computing, data centers, and power supply [2]. - China has made notable progress in certain areas, such as achieving self-sufficiency in industrial AI capital expenditure related to power and resource component manufacturing, but still relies on foreign suppliers for critical semiconductor supply chains [2]. - In the high bandwidth memory (HBM) sector, China is currently dependent on overseas suppliers, but domestic companies are actively seeking alternatives and increasing investments [2]. Group 2: Localization of Computing Power - The localization of AI computing power is expected to be a key battleground for China's AI industry, driven by geopolitical tensions and U.S. restrictions [3]. - AI computing expenditure in China is projected to grow from $18 billion in 2024 to $90 billion by 2029, with the self-sufficiency ratio expected to rise from 33% to 90% during the same period [3]. Group 3: Intelligent and Application Layers - The intelligent layer includes companies developing large language models and those converting data assets into intelligent assets, while the application layer consists of companies embedding intelligent tools into specific use cases [4]. - China has a relatively high degree of self-sufficiency in both the intelligent and application layers, with domestic internet platforms dominating the application layer [4]. Group 4: Investment Outlook - The company maintains a positive outlook on investment opportunities, particularly in leading internet firms that play a crucial role in China's AI development [5]. - The acceleration of domestic chip innovation presents attractive investment opportunities across the semiconductor supply chain, including equipment manufacturers and chip packaging companies [5]. - The anticipated easing of U.S.-China trade relations is expected to provide strong upward momentum for the technology sector, with projected earnings growth of 30% for Chinese tech stocks this year [5].