Core Viewpoint - The AI market is transitioning from a focus on overseas computing power to a broader expansion into domestic computing power and downstream software applications, marking the beginning of a new phase in the AI ecosystem [1][2][6] Domestic Computing Power Expansion - Since late July, there has been a notable shift in the AI market towards domestic computing power and downstream applications, with significant gains observed in domestic computing power on August 22 [2][6] - The current expansion phase is still in its early stages, with numerous sub-sectors within domestic computing power and applications that warrant attention [1][2] Performance Comparison - Since June, the North American computing power chain has outperformed other sectors, with light modules and PCBs seeing increases of 102.3% and 91.3% respectively, while most other sectors have seen gains below 40% [2][5] - The price comparison between North American and domestic computing power chains remains high, indicating that domestic computing power has room for growth [5] Catalysts for Expansion - Recent developments, such as the release of the DeepSeek V3.1 model tailored for next-generation domestic chips, are reinforcing confidence in the domestic AI ecosystem and its potential for growth [6] - Anticipated catalysts include increased domestic chip production, renewed capital expenditures from major companies, and the upcoming release of DeepSeek R2 [6] Focus Areas for Investment - The focus for future investments should include the expansion of the domestic computing power chain (semiconductor equipment and materials) and the domestic downstream application sector (Hong Kong internet and software applications) [6][10] - The Hong Kong internet sector has underperformed compared to the A-share TMT industry since June, but it presents multiple rebound opportunities due to external liquidity sensitivity and accelerated domestic computing power replacement [6] Software Applications - The rapid advancement of domestic open-source models, exemplified by DeepSeek V3.1, enhances confidence in the domestic AI application landscape [13] - There is a growing focus on midstream software services (SAAS, AI agents, industry-specific software) and downstream applications (gaming, humanoid robots, e-government), as the upstream computing power market continues to expand [13]

Group 1: Macroeconomic Insights - The Federal Reserve, led by Powell, has indicated a shift towards a dovish stance, suggesting a potential preventive interest rate cut in September 2025, with expectations of two cuts within the year, totaling around 50 basis points [3][5]. - Powell's speech at the Jackson Hole conference highlighted three key points: a reassessment of the labor market indicating a risk of job deterioration, the ongoing impact of tariffs on inflation without triggering a wage-price spiral, and a greater risk of employment decline compared to inflation rise [3][5]. - The revised monetary policy framework reflects minor adjustments aimed at addressing current employment and inflation dynamics, providing more flexibility for future policy adjustments [4]. Group 2: Technology Sector Trends - The technology sector is experiencing a surge, with AI emerging as a dominant theme, leading to significant capital inflows and market activity, particularly in domestic GPU and server markets [9][10]. - The launch of DeepSeek's V3.1 model demonstrates advancements in AI capabilities, enhancing efficiency and performance in various applications, indicating a robust growth trajectory for AI-related companies [21][24]. - The robotics industry is transitioning from exploration to commercial scale, with significant advancements expected by 2025, positioning it as a key area for investment [11]. Group 3: Hong Kong Market Outlook - Despite underperforming compared to A-shares, the Hong Kong market is expected to benefit from three positive factors: potential technological breakthroughs in the tech sector, a favorable shift in foreign capital flows due to anticipated interest rate cuts, and continued inflows from southbound capital [16][18][19]. - The valuation of the Hang Seng Index remains attractive, with significant upside potential compared to historical peaks, suggesting a recovery in the second half of the year [18][19]. Group 4: Consumer and Equipment Investment - The government is enhancing fiscal and financial support to stimulate consumption, with specific focus on sectors like new consumption and high-end equipment, which are expected to see substantial investment [12][14]. - The release of special bonds to support equipment upgrades is projected to drive over 1 trillion yuan in total investment across various sectors, indicating strong government backing for industrial growth [12].