Core Viewpoint - Chinese enterprises are embracing a new global upcycle in the excavator market, with overseas excavator sales recovering from -15% in January 2025 to +14% in October 2025, indicating a synchronized global demand recovery [1] Group 1: Market Insights - Japan's construction machinery demand remains resilient despite a significant drop in downstream demand post-bubble economy, with excavator ownership only declining by 30% [2] - In Japan, domestic sales are decoupling from real estate, leading to a stable sales volume, with a shift towards rental and second-hand export models [2] - China's excavator operating hours are still at a high level, providing a buffer for demand, supported by replacement needs and decoupling from real estate [2] Group 2: U.S. Market Dynamics - The U.S. market faces a long-term shortage of excavator ownership, with stock replacement driving demand, supported by both residential and non-residential investments [3] - Future growth drivers include structural support from AI data center infrastructure, the return of U.S. manufacturing boosting large-scale infrastructure growth, and potential stimulation of the housing market following Federal Reserve interest rate cuts [3] - Historical insights from Komatsu's entry into the U.S. market highlight the importance of macro factors, quality, company culture, and localization in overcoming market barriers [3] - Chinese manufacturers are positioned to capitalize on the shift of U.S. construction machinery from premium brands to more general industrial products, leveraging their supply chain advantages and manufacturing efficiency [3] Group 3: Asia, Africa, and Latin America Market - The Asia, Africa, and Latin America markets are primarily driven by mining and energy sectors, with Chinese brands capturing over 40% of the excavator market share in these regions by 2023 [4] - China's infrastructure investment is effectively replacing energy imports from these regions, indicating a strategic link between excavator exports and infrastructure development [4] - The potential for new excavator markets to grow by 60% exists if the share of second-hand excavators from Europe and the U.S. in these regions decreases from 50% to 20% [4] - Chinese enterprises are transitioning from commodity exports to capital exports, establishing local manufacturing in Indonesia to enhance market share and create new pathways into developed countries [4] Group 4: Investment Recommendations - Recommended stocks include SANY Heavy Industry (600031), XCMG Machinery (000425), Zoomlion Heavy Industry (000157), LiuGong Machinery (000528), and Hengli Hydraulic (601100) [4]

Investment Rating - The industry investment rating is "Buy" [4] Core Insights - The report indicates that the global excavator market is entering a new upward cycle, with overseas excavator sales recovering from -15% in January 2025 to +14% in October 2025. The recovery point of the cycle has arrived, with major growth regions including the US, Western Europe, Japan, and Asia-Pacific experiencing acceleration in demand [18][20]. - Chinese companies have successfully established a presence in overseas markets, with their market share in Africa, the Middle East, Southeast Asia, and Russian-speaking regions exceeding 30% by 2024, and over 5% in Europe and North America [20] - The report emphasizes the importance of tailored strategies for different markets, highlighting Japan, the US, and Asia-Pacific as key areas for in-depth analysis [20]. Summary by Sections Introduction - The global excavator market is experiencing a new upward cycle, with significant recovery in sales and demand across various regions [18]. Long-Cycle Perspective on Global Market Differences - Mature markets show relatively stable demand, while emerging markets exhibit greater volatility. The global earthmoving machinery sales have increased from 450,000 units in 2000 to an estimated 1,170,000 units in 2024 [25]. - The report categorizes the global market into four types: emerging markets (India), semi-mature markets (China), mature markets (Europe and North America), and stock markets (Japan) [26]. Japan Market: Stock Market and Demand Growth - Japan's construction machinery market has stabilized after experiencing significant downturns, with a focus on replacement cycles rather than new demand. The report notes that even during economic downturns, the decline in excavator ownership was less severe than the drop in construction investment [60][67]. US Market: High Value and Market Barriers - The US market is characterized by long-term upward demand driven by insufficient equipment stock and ongoing investments in residential and non-residential sectors. The report discusses the potential for Chinese companies to penetrate the US market by leveraging their competitive advantages [60]. Belt and Road Initiative: Potential Market Space - The Belt and Road Initiative is identified as a key area for growth, with demand driven by mining and infrastructure projects. The report highlights the potential for Chinese companies to increase their market share in these regions [60]. Investment Recommendations - The report recommends investing in companies such as SANY Heavy Industry, XCMG, Zoomlion, LiuGong, and Hengli Hydraulic, indicating strong growth potential in the excavator market [20].

Group 1 - The core argument of the article highlights the extreme economic divergence in the U.S., with GDP growth in 2025 primarily driven by data centers and information technology, while other sectors show minimal growth [1] - OpenAI plans to invest approximately $1.4 trillion to build over 30 gigawatts of computing infrastructure, aiming to add 1 gigawatt weekly [1][3] - Musk's xAI aims to achieve AI computing power equivalent to 50 million H100 units within five years, indicating a significant push in AI infrastructure [1][3] Group 2 - Major AI companies are aggressively investing in data centers, with OpenAI and Microsoft leading with projects worth hundreds of billions [3][4] - OpenAI's ambition includes a potential 10-gigawatt Stargate project, which could represent a $5 trillion industry over the next 5 to 10 years [3][4] - The investment in data center infrastructure is projected to reach $5 to $7 trillion over the next five years, reflecting the urgency in scaling AI capabilities [5][4] Group 3 - The U.S. electricity system has been growing slowly, with an annual increase of less than 1%, leading to a significant gap between electricity supply and the demand from data centers [25][26] - It is estimated that the U.S. will need to add approximately 80 gigawatts of power annually to meet the growth demands from data centers, electric vehicles, and manufacturing [26][29] - Currently, there is a projected annual shortfall of about 20 gigawatts in electricity supply, which could lead to a cumulative deficit of 100 gigawatts over the next five years [26][27] Group 4 - The competition for energy resources is intensifying, with companies like xAI acquiring a significant portion of available gas turbine generators to power their data centers [37][38] - The supply chain for gas turbines is currently strained, with GE's production capacity being insufficient to meet the rising demand from AI data centers [37][38] - Companies are also facing challenges in sourcing transformers, which have long lead times and are critical for data center operations [41][42] Group 5 - The shift towards high-voltage direct current (HVDC) systems is being explored to improve efficiency in data centers, with NVIDIA advocating for an 800-volt standard [43][44] - The current electricity supply architecture in data centers is primarily based on lower voltage systems, which leads to significant efficiency losses [44][45] - The transition to higher voltage systems is seen as essential for meeting the growing power demands of AI applications and improving overall operational efficiency [48][49]