Investment Rating - The industry investment rating is "Overweight" (maintained) [1] Core Insights - The report emphasizes the positive outlook for the AI industry, particularly in the context of the "AI + Manufacturing" initiative launched by the Ministry of Industry and Information Technology, which aims to promote deep integration of AI technology in manufacturing by 2027 [4] - The report highlights a potential recovery in domestic AIDC (Artificial Intelligence Data Center) bidding, indicating an increase in demand for domestic AI computing power [5] - Century Internet's financial performance shows significant growth, with a 21.7% year-on-year revenue increase in Q3 2025, suggesting a continued recovery in the AIDC sector [6] Summary by Sections AI Industry Development - The report notes that the government is actively promoting AI applications, which is expected to drive demand for domestic AI computing power [4] - The focus is on three core areas: AIDC, network endpoints, and computing endpoints, with specific recommended stocks for each segment [7] Financial Performance Indicators - Alibaba's capital expenditure for FY2026 Q2 reached 31.501 billion yuan, a year-on-year increase of 80.1%, indicating strong investment in AI cloud computing infrastructure [5] - Century Internet reported a total revenue of 2.58 billion yuan in Q3 2025, with adjusted EBITDA growing by 27.5% year-on-year, reflecting robust operational performance [6] Recommended Stocks - For AIDC data centers, recommended stocks include: Guanghuan New Network, Aofei Data, and others [7] - For AIDC liquid cooling and power supply, recommended stocks include: Yingweike and others [7] - For network endpoints, recommended stocks include: Zhongji Xuchuang, and others [7] - For computing endpoints, recommended stocks include: Oulutong, and others [7]

Group 1: Market Overview - The current market phase is characterized as a "bull market not afraid to wait," indicating a dual bottom area for A-share fundamentals and capital inflows, with two possible outcomes: continued bottoming or improvement, with conditions for improvement becoming increasingly favorable [7] - The focus is on structural bull markets, particularly in the AI computing power industry chain, solid-state batteries, and energy storage, which are seen as high-potential sectors [7] - The Hong Kong stock market is expected to benefit from new industrial catalysts, with the mid-term narrative of the Federal Reserve likely to support the market through a weaker dollar and potential interest rate cuts [7] Group 2: Valuation and Industry Comparison - As of September 14, 2025, the valuation metrics for major indices are as follows: - CSI All Share (excluding ST) PE at 21.5x (81st percentile historically) - SSE 50 PE at 11.9x (64th percentile) - ChiNext PE at 42.3x (39th percentile) [10] - Industries with PE valuations above the historical 85th percentile include real estate, steel, construction materials, and defense [11] - No industries are currently reported with both PE and PB valuations below the historical 15th percentile [11] Group 3: Global Asset Allocation - There has been a significant outflow of global funds from the US stock market, with Asian markets leading the gains, particularly driven by developments in AI and technology sectors [13] - The report highlights the importance of strategic overseas port operations for Chinese enterprises, emphasizing the role of private companies in the "going out" strategy, which has become crucial for growth [18][19] Group 4: Policy and Reform Insights - The recent approval of a pilot program for market-oriented allocation of factors in ten major urban areas aims to enhance technological collaboration and innovation, focusing on key elements such as technology, land, and human resources [22] - The initiative is expected to significantly impact industries related to technology and innovation, fostering a more efficient allocation of resources [22]