Investment Rating - The report suggests a positive outlook for the AI-related sectors, particularly in servers and IDC, driven by strong demand for AI computing power and infrastructure [4]. Core Insights - The continuous breakthroughs in large model capabilities are expected to accelerate AI penetration across various industries, leading to sustained growth in computing power demand [1]. - Oracle's capital expenditure guidance indicates strong AI demand, with projected cloud revenue growth exceeding 40% in FY26 [1]. - NVIDIA's plans to deploy over 3000 EFLOPS of AI computing power in Europe and establish 20 AI factories highlight the increasing demand for AI infrastructure [1]. - The report emphasizes the robust growth in AI computing demand, particularly in Europe, and recommends focusing on companies within NVIDIA's supply chain [2][6]. Summary by Sections Industry Overview - The telecommunications sector is experiencing steady growth, with major operators reporting a 1.0% year-on-year increase in telecom revenue [3]. - The AI computing demand remains strong globally, with NVIDIA's initiatives in Europe expected to significantly boost AI capabilities [6]. Sub-Sector Analysis - **Servers**: The server index decreased by 2.10% this week but has a monthly increase of 2.11%. The demand for AI computing power is expected to rise sharply in Europe due to NVIDIA's initiatives [2][6]. - **Optical Modules**: The optical module sector saw a 1.64% increase this week, with a monthly rise of 13.47%. The demand for 800G/1.6T modules is expected to increase due to Oracle's capital expenditure adjustments [2][10]. - **IDC**: The IDC index decreased by 1.85% this week but has increased by 4.44% this month. The establishment of AI factories in Europe is anticipated to drive IDC construction [14]. Key Data Updates - Major telecom operators reported a total revenue of 598.5 billion yuan in the first four months, reflecting a 1.0% year-on-year growth [3]. - Capital expenditures from major tech companies like Microsoft, Google, Meta, and Amazon have shown significant year-on-year increases, indicating strong investment in AI infrastructure [3]. Investment Recommendations - The report recommends focusing on sectors such as servers and IDC driven by domestic AI development, as well as optical modules benefiting from overseas AI growth [4].

Investment Rating - The industry investment rating is "Positive" [2] Core Insights - The semiconductor sector has shown a year-to-date increase of 1.53%, while other electronic sectors have experienced mixed performance [2] - Broadcom's Q2 revenue reached a record high of $15 billion, with a year-over-year growth of 20%, driven by strong performance in AI semiconductor business and VMware [2][3] - AI business revenue for Broadcom grew by 46% year-over-year, contributing $4.4 billion in Q2 [2] - The company expects the growth trend in AI revenue to continue into FY26, with Q3 revenue guidance of $15.8 billion, representing a 21% year-over-year increase [2] Summary by Sections Market Performance - The performance of the semiconductor sector has been positive with a 3.25% increase this week, while other electronic sectors have shown varied results [2][8] - Notable stock performances include Apple (+1.53%), Tesla (-14.81%), and Micron Technology (+14.93%) [2][11] Financial Highlights - Broadcom's Q2 GAAP net profit was $4.965 billion, a 134% increase year-over-year [2] - The semiconductor division's revenue was $8.4 billion, up 17% year-over-year, with AI business revenue reaching $4.4 billion [2] - The gross margin for Q2 was 68%, an increase of 5.7 percentage points year-over-year [2] Future Outlook - Broadcom has released the Tomahawk 6 switch chip, which has a single-chip switching capacity of 102.4 Tbps, double the current Ethernet switch bandwidth [2] - The company anticipates Q3 semiconductor revenue to be $9.1 billion, a 25% increase year-over-year, with AI business revenue projected to reach $5.1 billion [2] Investment Recommendations - Suggested stocks to watch include companies in the computing chain such as Industrial Fulian, Shenzhen South Circuit, and others in the domestic computing and semiconductor sectors [2]

Investment Rating - The report maintains an "Outperform the Market" rating for the communication industry [4][5][60]. Core Insights - The communication industry is experiencing a high demand for AI-related technologies, with companies like Broadcom and Credo reporting significant revenue growth driven by AI applications [1][12][18]. - Broadcom's new Tomahawk 6 switch chip, capable of 102.4 Tbps, is designed to support large-scale AI networks, indicating a strong focus on enhancing AI infrastructure [1][15][17]. - Credo's revenue for Q4 of FY2025 increased by 180% year-over-year, reflecting the growing demand for AI solutions in cloud services [1][18]. - Wistron reported record revenue in May 2025, driven by a surge in server shipments, highlighting the robust growth in the data center segment [1][23]. Summary by Sections Industry News Tracking - Broadcom's Q2 FY2025 revenue reached 150 billion CNY, a 20% year-over-year increase, with AI revenue exceeding 44 billion CNY, growing by 46% [1][12][14]. - Credo's Q4 FY2025 revenue was 1.70 billion USD, up 179.7% year-over-year, with a net profit margin of 38.4% [1][18][21]. - Wistron achieved a record revenue of 208.4 billion TWD in May 2025, marking a 162.14% increase year-over-year [1][23]. Market Performance - The communication sector index rose by 5.27% this week, outperforming the Shanghai Composite Index, which increased by 0.88% [2][47]. - Sub-sectors such as optical modules and enterprise communication showed strong performance, with increases of 13.37% and 6.35% respectively [2][51]. Investment Recommendations - Focus on AI development in both cloud and edge computing, with specific attention to companies involved in optical devices and modules [3][55]. - Long-term investment in major telecom operators is recommended due to their stable operations and increasing dividend payouts [3][55]. - Key recommended stocks include China Mobile, Tianfu Communication, and Runze Technology [3][55].