Core Viewpoint - BNP Paribas believes that while major cloud computing giants like Microsoft and Google continue to dominate the AI application market, companies like ServiceNow and SAP will show "growth resilience" but will lag behind in stock price performance compared to these cloud leaders [1][2]. Group 1: Cloud Computing Giants - BNP Paribas maintains a strong bullish stance on Microsoft, viewing it as one of the biggest beneficiaries of the AI application wave, with a target price of $632 [3][4]. - The bank's enterprise spending trend survey indicates that companies are more optimistic about spending on major cloud platforms like Microsoft Azure, Amazon AWS, and Google GCP, which are seen as resilient in terms of customer spending [4][5]. Group 2: ServiceNow and SAP - ServiceNow and SAP are considered to have good fundamental resilience and improved demand, but their future outlook is not as positive as that of the major cloud computing giants [4][5]. - BNP Paribas has significantly lowered its target price for ServiceNow from $186 to $120, reflecting a cautious stance on its stock price outlook [3][4]. Group 3: Market Trends and Predictions - The bank's analysis suggests that traditional cloud software companies are facing more cautious IT spending from enterprises, especially in uncertain macroeconomic and geopolitical conditions [5][6]. - Analysts expect Microsoft to report a Q2 EPS of approximately $3.92, a 34% year-over-year increase, with total revenue around $80.28 billion, indicating a 30% year-over-year growth [7]. - ServiceNow is projected to report an EPS of about $0.89 and revenue of approximately $3.53 billion, reflecting a 19% year-over-year growth [7].

Core Viewpoint - 2026 is expected to be a year of accelerated revenue growth for major cloud computing companies in North America, driven primarily by demand for AI training and inference from large customers, alongside a steady recovery in traditional cloud business [1] Group 1: Revenue Growth Drivers - AI training and inference demand from large clients will be a major driver of revenue growth [1] - Traditional cloud business demand is also showing a steady recovery [1] Group 2: Supply Side Dynamics - The production of data centers and custom chips is expected to alleviate the tightness in computing power supply [1] Group 3: Future Projections - Revenue growth rates for Google GCP, Amazon AWS, and Microsoft Azure are projected to accelerate further in 2026 compared to 2025, based on order fulfillment rhythms and the data center reserves of each cloud vendor [1] - Continued optimism is expressed regarding investment opportunities in leading cloud vendors for 2026 [1]

Core Insights - 2026 is expected to be a year of accelerated revenue growth for major cloud computing companies in North America, driven primarily by demand for AI training and inference from large customers [1] - Traditional cloud business demand is also showing steady recovery, while the production of data centers and custom chips will further alleviate the tightness in computing power supply [1] - Based on the pace of order fulfillment and the data center reserves of various cloud providers, it is anticipated that the year-on-year revenue growth rates for Google GCP, Amazon AWS, and Microsoft Azure will accelerate further in 2026 compared to 2025 [1] - The company maintains a positive outlook on investment opportunities for leading cloud providers in 2026 [1]

Group 1 - The core viewpoint highlights that AI computing hardware-related stocks are leading the market, driven by strong demand from overseas cloud providers and the trend of domestic substitution in computing infrastructure due to national security concerns [1][3]. Group 2 - Recent financial reports indicate significant growth in cloud computing revenues for major overseas cloud providers, with Amazon AWS, Microsoft Azure, and Google GCP reporting year-on-year revenue increases of 17%, 39%, and 32% respectively in Q2 2025 [2]. - The capital expenditure (CAPEX) for leading cloud providers collectively grew by 64% year-on-year in Q2 2025, with an upward revision of the annual CAPEX guidance [2]. - Projections suggest that the investment in AI servers by the four major cloud providers (Microsoft, Amazon, Google, Meta) will reach $151.3 billion in 2025 (+81%) and $248.3 billion in 2026 (+64%) [2]. Group 3 - The trend of domestic substitution in the computing infrastructure sector is emphasized as a long-term necessity for national security, especially in light of uncertainties surrounding tariffs and trade policies from the current U.S. administration [3]. - The Chinese government is unlikely to allow the AI industry to heavily rely on imported infrastructure, reinforcing the need for domestic alternatives [3]. - Investors are encouraged to consider products like the Communication ETF (515880) and the Entrepreneurship Board AI ETF (159388) to capitalize on the high demand for global AI computing hardware, as well as the Chip ETF (512760) for the domestic substitution trend [3].