Core Viewpoint - The report from Jefferies indicates that ZTE Corporation (00763) is overvalued, maintaining a "Underperform" rating after a 100% increase in stock price, with a projected P/E ratio of 24 times for 2025 and a negative CAGR of -6.5% for earnings per share [1] Financial Performance - ZTE's Q3 2025 revenue, core operating profit, and net profit showed year-on-year growth of 5%, but declines of 115% and 88% respectively, significantly missing market expectations [1] - Gross margin fell from 40% to 26% year-on-year, leading to a 33% decline in gross profit, attributed to delays in telecom equipment delivery and weak telecom demand [1] Market Consensus and Projections - Jefferies' net profit forecasts for 2026 and 2027 are 35% and 48% lower than market consensus, respectively [1] - The firm anticipates that high-margin telecom revenues may experience double-digit declines in 2025 due to further capital expenditure cuts by Chinese telecom operators [1] Valuation Adjustments - The target price for ZTE has been reduced from HKD 27.27 to HKD 25.71 [1] - There is a risk of valuation downgrades as investor optimism regarding new business ventures is unlikely to materialize [1]

Core Viewpoint - Jefferies has downgraded ZTE Corporation's target price to HKD 25.71, citing overvaluation and a significant miss in Q3 performance compared to market expectations [1] Financial Performance - ZTE's Q3 2025 revenue, core operating profit, and net profit saw year-on-year growth of 5%, but core operating profit and net profit dropped by 115% and 88% respectively, significantly underperforming market expectations [1] - Gross margin decreased from 40% to 26%, leading to a 33% decline in gross profit, attributed to delays in telecom equipment delivery and weak telecom demand [1] Valuation and Forecast - Following a 100% increase in stock price, ZTE is currently trading at a forecasted P/E ratio of 24x for 2025, with a projected compound annual growth rate (CAGR) of -6.5% for earnings per share [1] - Jefferies' net profit forecasts for 2026 and 2027 are 35% and 48% lower than market consensus, indicating potential risks for valuation adjustments [1] Market Outlook - The company anticipates an improvement in gross margin for Q4, but overall, there is a risk of double-digit declines in high-margin telecom revenue in 2025 due to further capital expenditure cuts by Chinese telecom operators [1] - New business areas such as servers and switches are not expected to provide sufficient offset to the declining telecom revenue [1]

Market Overview - The meeting between the Chinese and U.S. leaders has boosted market sentiment, leading to a collective rise in Hong Kong's three major indices, with the Hang Seng Index up by 0.54%, the National Index up by 0.53%, and the Hang Seng Tech Index up by 0.31% [1] Company Performance - Major technology stocks showed mixed performance, with Meituan rising by 4% and Tencent increasing by 2.4%, while Baidu, Xiaomi, and Kuaishou experienced declines [1] - ZTE Corporation's stock fell over 9% following its earnings report, marking it as the weakest performer in the telecommunications equipment sector [1] Sector Performance - The copper price reached a new high, and spot gold prices increased, leading to a rise in copper and gold stocks, which led the gains in the non-ferrous metal sector [1] - Coal, shipping, and photovoltaic stocks generally performed well, while the biopharmaceutical, domestic real estate, and gaming sectors were broadly sluggish [1]

Report Summary 1. Report Industry Investment Rating No information regarding the industry investment rating is provided in the report. 2. Core Viewpoints - The Fed's potential rate cuts, geopolitical risks, and the accelerating restructuring of the international trade and monetary system continue to provide safe - haven demand and liquidity premium for precious metals. However, in the short term, precious metals need to consolidate to digest the previous sharp rise. Investors are advised to maintain a bullish trading approach and observe the support level of London gold at $3,800 - $3,850 per ounce [4]. - The upward trend of precious metals since late August may continue until 2026. The six - month and one - year target prices for London gold are $4,500 and $4,800 per ounce respectively, and for London silver are $58 and $63 per ounce respectively. Investors are advised to hold a long - position trading strategy, and short - hedgers can appropriately reduce the hedging ratio. But currently, the price - to - earnings ratio of gold is too high, and long - position investors need to control their positions and be aware of short - term adjustment risks [5]. 3. Summary by Relevant Catalogs 3.1 Precious Metals Market Trends and Outlook - **Intraday Trend**: Optimistic expectations for a trade agreement from the China - US summit and a strong global stock market weakened the safe - haven demand for precious metals. Overnight, London gold dropped to $3,886 per ounce, with a maximum adjustment of 11.3% since October 20th. Subsequently, expectations of a Fed rate cut drove bargain - hunting funds into the market, and London gold rebounded to around $4,000 per ounce during the Asian session on the 29th [4]. - **Domestic Market**: The Shanghai Gold Index closed at 913.02, up 1.07%; the Shanghai Silver Index closed at 11,354, up 2.60%; Gold T + D closed at 910.50, up 1.54%; Silver T + D closed at 11,321, up 2.96% [5]. - **Mid - term Trend**: The US employment and inflation situation supports the Fed to restart the rate - cut process, and under the dual influence of Trump's pressure and management changes, the rate - cut amplitude may be larger. The election of Kōmeitō's candidate as the Japanese Prime Minister raises concerns about the return of Abenomics and the re - flooding of yen liquidity. The accelerating restructuring of the global trade and monetary system and high geopolitical risks continue to generate allocation and safe - haven demand for gold. The support levels for London gold are $4,130 and $3,975 per ounce, and for London silver are $50.31 and $47.76 per ounce [5]. 3.2 Main Macroeconomic Events/Data - US consumer confidence dropped to a six - month low of 94.6 in October due to concerns about short - term job opportunities, providing more reasons for the Fed to cut rates on Wednesday. The government shutdown was a major concern [17]. - NVIDIA CEO Huang Renxun announced that the company will build seven new supercomputers for the US Department of Energy and has received $500 billion in AI chip orders. NVIDIA has been excluded from the Chinese market and did not apply for US export licenses for the latest chips. It also announced a cooperation with Nokia to enter the AI communication market [17]. - US President Trump criticized Fed Chairman Powell and mentioned many candidates to replace him. US Treasury Secretary Bessent said that the final candidates for the Fed Chairman include five people [17]. - The US FCC voted 3 - 0 to strengthen regulations on telecommunications equipment produced by Chinese companies considered a national security risk, banning new equipment containing parts from restricted - list companies from getting authorization and giving the FCC the power to ban the sale of authorized equipment in specific cases [18].

Core Viewpoint - The article emphasizes the transformative impact of AI and accelerated computing on various industries, highlighting NVIDIA's leadership in redefining computing paradigms and its strategic partnerships to advance technologies like 6G and quantum computing [4][6][15]. Group 1: NVIDIA's Innovations and Partnerships - NVIDIA's new product line, NVIDIA ARC, aims to enhance 6G infrastructure through AI and accelerated computing, marking a significant step for the U.S. to regain leadership in telecommunications technology [4][17]. - The collaboration with Nokia is expected to integrate NVIDIA's technology into future base stations, enhancing AI capabilities in wireless communication [18]. - NVIDIA's advancements in quantum computing include the introduction of NVQLink and CUDAQ, facilitating collaboration between quantum processing units and GPU supercomputers [5][23]. Group 2: AI and Accelerated Computing - AI is described as a force that redefines the entire computing stack, requiring substantial energy, GPU power, and new algorithmic frameworks [6][28]. - The shift from general computing to accelerated computing is highlighted as a critical transition, with NVIDIA's CUDA framework enabling this evolution [10][49]. - The article discusses the exponential growth in demand for computational resources driven by smarter AI models and their applications across various sectors [39][40]. Group 3: Future Outlook and Market Potential - NVIDIA's market capitalization reached $4.89 trillion, with expectations that GPU sales will reach $500 billion by the end of 2026, driven by government contracts and diversified revenue streams [6][6]. - The article suggests that the AI industry is at a turning point, with models becoming sophisticated enough to create value and warrant investment [39][40]. - The need for innovative solutions to meet the increasing computational demands is emphasized, particularly as traditional scaling methods face limitations [42][43].

Core Viewpoint - Nvidia's CEO Jensen Huang emphasized the company's commitment to investing in AI infrastructure to maintain the United States' technological leadership, showcasing breakthroughs in multiple fields including 6G communication, quantum computing, AI factories, and robotics [1][12]. Group 1: 6G Communication - Nvidia announced a strategic partnership with Nokia to launch the "Nvidia Aerial RAN Computer Arc," aimed at ensuring the U.S. position in the 6G era. This product integrates Blackwell GPU, ConnectX networking, and Aerial CUDA-X library, enabling software-defined, programmable wireless communication and AI processing capabilities [3][2]. Group 2: Quantum Computing - The introduction of the NVQ Link interconnect architecture marks a significant advancement in quantum computing, allowing deep integration between quantum computers and GPU supercomputers. This architecture supports precise control and calibration of quantum processors and enables hybrid simulations, with scalability from hundreds to potentially hundreds of thousands of qubits [5][4]. Group 3: AI Technology - Huang defined the concept of "AI factories," which focus on generating "Tokens" for AI applications, highlighting a shift from traditional computing methods to machine learning and GPU-based training. The demand for AI computing power is experiencing "double exponential growth," prompting Nvidia to optimize its Grace Blackwell platform, achieving a tenfold performance increase and a tenfold reduction in Token generation costs compared to the previous generation [7][6]. Group 4: Business Growth - Nvidia reported impressive business growth, with 6 million Blackwell GPUs shipped and a cumulative order backlog of $500 billion through 2026, significantly surpassing previous product lifecycles. The company is also accelerating its "Made in America" strategy, with a factory in Arizona fully operational for Blackwell products [9][8]. Group 5: Ecosystem Collaboration - Nvidia is positioning itself as the largest contributor to open-source models, with 23 models leading the industry in downloads. The company is also deepening cross-industry collaborations, including partnerships in cybersecurity, data processing, and robotics, to enhance AI applications and infrastructure [11][10].

Core Insights - Nvidia announced a $1 billion investment in Nokia to accelerate AI-RAN innovation and facilitate the transition from 5G to 6G [1] - Following the announcement, Nokia's stock surged nearly 30% during the day, reaching a high of $8.19, the highest level since January 2021, and closed up 22.99% at $7.779 [1] - Nvidia will acquire a 2.9% stake in Nokia by purchasing shares at $6.01 each, contingent on customary closing conditions [1] Company Collaboration - Nvidia and Nokia have established a strategic partnership to integrate Nvidia-powered commercial AI-RAN products into Nokia's RAN product portfolio [1] - Nokia plans to launch AI-native 5G-A and 6G networks on Nvidia's platform [1] - T-Mobile US will collaborate with both companies to test AI-RAN technology, with field validation expected to begin in 2026 [1] Industry Impact - Nvidia's Huang Renxun stated that AI-RAN based on CUDA and AI will revolutionize the telecommunications industry, marking a transformative platform change [2] - Nokia's CEO Justin Hotard emphasized that the next leap in telecommunications involves a fundamental redesign of networks to provide AI-driven connectivity, managing intelligent data from data centers to the edge [2]

Core Insights - Nvidia is making a strategic investment of $1 billion in Nokia, acquiring 2.9% of the company and becoming its second-largest shareholder [1] - The partnership aims to develop AI network solutions and explore the integration of Nokia's data center switching and optical technologies into Nvidia's future AI infrastructure [1][5] - The collaboration will also focus on the next-generation 6G technology, indicating a deeper fusion of AI and telecommunications [1][2] Investment Details - Nvidia will purchase 166.4 million new shares of Nokia at a price of $6.01 per share, totaling $1 billion [1] - This investment is part of Nvidia's broader strategy to secure its dominance in AI infrastructure, extending from chips to network layers [4][5] - The partnership is non-exclusive, allowing Nokia to continue using existing suppliers like Marvell [5] Market Reaction - Following the announcement, Nokia's stock surged over 20%, reaching its highest point since January 2016, while Nvidia's stock also saw an increase [1] - Analysts view this investment as a strong endorsement of Nokia's capabilities, particularly in the context of next-generation networks like 6G [2] Future Outlook - New equipment from the partnership is expected to start generating revenue from 2027, with initial commercial deployments of 5G followed by 6G [2] - The collaboration will also involve working with T-Mobile US to develop AI radio technology for 6G, with trials set to begin next year [2] Industry Trends - The investment highlights the growing importance of network infrastructure in the AI race, as demand for connectivity solutions increases alongside the need for faster data movement [3] - McKinsey predicts that global capital expenditure on data center infrastructure will exceed $1.7 trillion by 2030, driven largely by AI expansion [4]

Core Insights - Nvidia announced a partnership with Nokia, the world's second-largest telecom manufacturer, in a $3 trillion industry [1] - The collaboration aims to leverage accelerated computing and artificial intelligence to transform the telecom sector [1] - Nvidia's CEO Jensen Huang highlighted the introduction of a new product line, Arc Aerial RAN Computer, to support 6G technology [1] Company Developments - Nvidia's investment in Nokia is part of a series of significant investments made recently [1] - The partnership is expected to enhance the capabilities of millions of global base stations through innovative technologies [1] - Nvidia also provided optimistic revenue forecasts for its GPU products while discussing expansions beyond GPUs [1]

Core Viewpoint - Nvidia plans to invest $1 billion in Nokia, acquiring approximately 2.9% equity through the purchase of 166 million shares at $6.01 each, to support Nokia's transition to AI-native 6G networks and enhance collaboration in 5G and 6G network software and AI infrastructure [2][3][5]. Group 1: Investment and Collaboration - Nvidia will acquire 166 million shares of Nokia at $6.01 per share, resulting in a 2.9% ownership stake [5]. - The partnership focuses on leveraging Nvidia's chips to accelerate Nokia's 5G and 6G network software, while exploring the integration of Nokia's data center technology into Nvidia's AI infrastructure [5][11]. - The collaboration aims to combine the core technological strengths of both companies to meet the demands of AI-driven network infrastructure [5][11]. Group 2: AI-RAN Technology Development - Nvidia introduced the Aerial RAN Computer (ARC) platform for 6G networks, which Nokia will use to expand its RAN product offerings and develop new AI-RAN products [5][10]. - T-Mobile plans to conduct field tests of AI-RAN technology starting in 2026, integrating these technologies into its 6G development processes [5][13]. - The AI-RAN system is expected to enhance network performance and efficiency, catering to the growing demand for AI applications and billions of new connected devices [8][10]. Group 3: Transition to AI-native Networks - The Aerial RAN Computer Pro platform enables telecom operators to transition smoothly from 5G-Advanced to 6G networks through software upgrades [10][11]. - Nokia's unique anyRAN approach simplifies the introduction of the ARC-Pro platform, allowing for seamless upgrades and coexistence with existing RAN networks [10]. - The collaboration aims to provide a cost-effective and efficient pathway for the evolution of networks towards AI-driven capabilities [11]. Group 4: Broader AI Network Solutions - Beyond AI-RAN, Nvidia and Nokia will collaborate on AI network solutions, including the integration of Nokia's SR Linux software with Nvidia's Spectrum-X Ethernet platform [15][16]. - The partnership will explore incorporating Nokia's optical technologies into Nvidia's future AI infrastructure architecture [16]. - Nokia's strategic shift towards data center business, highlighted by its recent acquisition of Infinera Corp for $2.3 billion, is driven by the increasing demand for computing power due to the AI boom [16][17].