Group 1 - The core viewpoint of Tianfeng Securities is a strong outlook on investment opportunities in the AI computing power industry chain, particularly through 2026, with ongoing developments in both China and the US in AI and inference [1] - The report emphasizes the importance of monitoring AI industry dynamics and investment opportunities in AI applications, particularly in the "AI + overseas + satellite" sectors, highlighting key areas such as optical modules, liquid cooling, and domestic computing power lines [1] - The communication industry index has seen a significant increase of 55.58% as of November 14, 2025, ranking second among 31 industries, with institutional holdings in the communication sector rising to 7.14% in Q3 2025, an increase of 3.16 percentage points from Q2 2025 [1] Group 2 - The GB300 is expected to start significant volume production in the fourth quarter, which will drive the adoption of 1.6T optical modules, with silicon photonics expected to play a crucial role in the future development of optical modules due to its high integration, performance, and cost-effectiveness [2] - According to IDC, the data center switch market is the only product category in the global network market projected to experience positive growth in 2024, with China's switch market expected to grow by 5.9% year-on-year, and data center switches specifically projected to grow by 23.3% [3] - The revenue from 200G/400G devices in data center switches is expected to increase by 132.0% year-on-year, with port shipments rising by 166.5%, driven by AI-generated content (AIGC) [3]

Core Viewpoint - The AI hardware market is experiencing a significant upward revision in growth forecasts, driven by strong demand from hyperscalers and tier 2 cloud service providers, indicating a structural shift in capital expenditure within data centers [1][4][16]. Market Forecast Revision - The AI server market forecast for 2029 has been revised from $386 billion to $581 billion, reflecting a compound annual growth rate (CAGR) of 38% [4][5]. - The AI data center switch market is also projected to grow, reaching approximately $26 billion by 2029, with a five-year CAGR of 36% [5][15]. - In contrast, the traditional server market is expected to decline at a CAGR of -2% from 2024 to 2029, indicating a decisive shift in data center capital expenditure [5]. Growth Drivers - The report highlights that tier 2 cloud service providers and telecom operators are emerging as a significant growth force, alongside established hyperscalers like Amazon and Microsoft [7][11]. - The AI server market for hyperscalers is expected to grow at a CAGR of 28%, while tier 2 cloud service providers will see an astonishing CAGR of 66% [8][9]. Competitive Landscape - Dell has emerged as a major winner in the AI hardware market, with its market share in the tier 2 cloud and service provider segment increasing by 22 percentage points to 46% [12][13]. - In the enterprise market, Dell's share also rose by 13 percentage points to 30%, positioning it alongside Hewlett Packard Enterprise (HPE) [14]. - Conversely, Super Micro's market share declined by 7 percentage points to 29%, while Nvidia and white box manufacturers also saw declines [14]. Capital Expenditure Outlook - Overall capital expenditure by cloud providers is expected to accelerate, with predictions indicating growth to $850 billion by 2029, reflecting a CAGR of 24% from 2024 to 2029 [16].