Investment Rating - The report rates the electric power equipment industry as "stronger than the market" [3]. Core Viewpoints - The demand for electric power equipment is driven by the growth of data centers, which are becoming the core incremental application scenario for the industry. The report emphasizes the need to incorporate AI industry indicators to accurately gauge the demand for power distribution equipment [3][6]. - Capital expenditures from major cloud providers are a direct indicator of demand potential for power distribution equipment, with significant growth observed in overseas capital expenditures [9][12]. - The supply chain remains robust, with companies like NVIDIA and TSMC showing strong revenue growth, indicating a healthy supply of GPUs essential for data center operations [18][24]. - The application layer is witnessing an increase in AI model deployments, which directly impacts capital expenditure cycles and long-term demand for power distribution equipment [29][30]. Summary by Sections Demand Side - The report highlights that overseas cloud providers' capital expenditures reached $99.617 billion in Q3 2025, a year-on-year increase of 80.39% and a quarter-on-quarter increase of 9.54% [9]. - Domestic capital expenditures from Alibaba and Tencent showed a slowdown, with Alibaba's capital expenditure at 315.01 million yuan, up 80.10% year-on-year but down 18.55% quarter-on-quarter [12][15]. Supply Chain - NVIDIA's data center product revenue reached 362.571 billion yuan in Q3 2025, marking a historical peak with a quarter-on-quarter growth of 24.62% and a year-on-year growth of 66.44% [18]. - TSMC's revenue in November 2025 was 343.614 billion New Taiwan dollars, a year-on-year increase of 24.5% [24]. Application Layer - The report notes a steady increase in AI model updates and application deployments, which are crucial for determining the strength and sustainability of capital expenditure cycles [29]. - The price of tokens for AI models has decreased by over 50% following the release of new models, indicating a competitive market [46]. Key Recommendations - The report recommends investing in companies like Sunshine Power (300274.SZ) and suggests paying attention to Keda Data (002335.SZ), Kstar (002518.SZ), and Kelon Electronics (002121.SZ) as beneficiaries of the growing demand for power distribution equipment driven by data centers [3].