Guolian: Computing power and electricity are soaring, and demand for AI power supply equipment is increasing rapidly.

Guolian released a research report stating that the data center market is continuously growing, and domestic and foreign cloud companies' capital expenditure continues to maintain high growth. With the rapid development trend of AI, domestic operators are continuously increasing their investment in smart computing. The wave of large-scale capital expenditure by top Internet companies is spreading from overseas to domestic, and the rapid growth in computing power demand is expected to bring corresponding growth in data center power. It is optimistic about the subfields under industry that have logic such as domestic substitution, technological upgrades, and supply shortages, and focuses on investment opportunities in IDC manufacturers, liquid cooling systems, liquid cooling pumps, SMR small modular reactors, SOFC, UPS, diesel backup power sources, data center switchgear, and transformers. Guolian's main points are as follows: AI drives the increase in data center power AI is driving the continuous upgrading of data centers. The data center market is continuously growing, and domestic and foreign cloud companies' capital expenditure is still growing at a high rate. The scale of Chinese intelligent computing power is expected to continue to rise, reaching 1117 EFLOPS by 2027. The evolution of intelligent computing demand is driving the upgrade of the data center industry chain, placing higher demands on IT hardware and infrastructure. With the rapid development trend of AI, domestic operators are continuously increasing their investment in smart computing. It is predicted that the total power of domestic data centers will accelerate in the next 3 years, reaching 78.7 GW by 2027. Liquid cooling technology's essential attributes are becoming apparent AI processors consume significantly more power than traditional processors, highlighting the essential attributes of liquid cooling technology. The maximum power consumption of Huawei's Atlas 800 AI server is 5.6kW, and the Atlas 900 PoD's maximum power consumption is 46kW; at the 2024 GTC conference, NVIDIA is expected to release the NVL72 server with a power consumption of up to 120kW. According to IDC data, the size of the liquid-cooled server market in China is expected to reach $1.55 billion in 2023, and by 2027, the market size is expected to reach $7 billion; with an additional market space of approximately $2.8 billion for data center liquid cooling pumps in 2027. Wide prospects for primary power new technologies Major U.S. Internet giants have signed cooperation agreements with nuclear power companies, and SMR small modular reactors are expected to be widely used due to their advantages such as flexible site selection, short construction period, small initial investment, and scalability. It is estimated that the corresponding SMR market space for domestic data centers will increase from approximately $28 billion in 2024 to approximately $59.1 billion in 2027. Due to its excellent efficiency, large-scale power generation potential, environmental friendliness, and continuous power supply characteristics, SOFC technology has become a prime choice for backup power sources in the market. With the progress of batteries and cost reductions, it is expected that the market space for SOFC in data centers will increase from approximately $11.9 billion in 2024 to approximately $52.3 billion in 2027. Clear trend of self-reliance in supply and distribution equipment The construction of data centers significantly increases the demand for high-power UPS, with ample room for self-branded replacements; it is estimated that the market space for domestic data center UPS in 2027 is expected to reach $25.3 billion, with a 3-year CAGR of 29.0%. The gap between supply and demand for diesel backup power generators is expected to widen, reshaping the competitive landscape, and the market size is expected to reach $41.55 billion in 2027. The 2N power supply architecture is driving a multiple-fold increase in power equipment demand, with the market spaces for data center switchgear and transformers in China expected to be $13.45 billion and $6.33 billion, respectively by 2027. Investment recommendations: Focus on the demand growth of IDC construction supporting equipment It is recommended to focus on IDC manufacturers benefiting from the high growth of AIDC construction, such as Range Intelligent Computing Technology Group (300442.SZ); the enhancement of liquid cooling's essential attributes driven by increased power density, and companies such as Shenzhen Envicool Technology (002837.SZ); liquid cooling pump suppliers such as Nanfang Zhongjin Environment (300145.SZ), Zhejiang Dayuan Pumps Industry (603757.SH). Stable demand for clean power generation is increasing, and in the nuclear power sector, attention should be paid to companies such as China National Nuclear Power (601985.SH), CGN Power Co., Ltd. (003816.SZ), Jiangsu Shentong Valve (002438.SZ), while in the SOFC sector, companies like Anhui Estone Materials Technology (688733.SH), which has a full range of layout from powder to stack. The trend towards larger UPS systems raises barriers to entry, with ample room for self-branded replacements, and companies such as Kehua Data Co., Ltd. (002335.SZ), Shenzhen Kstar Science & Technology (002518.SZ) should be considered; in the BBU sector, companies like Eve Energy Co., Ltd. (300014.SZ) should be considered; in the field of diesel backup power generators, companies like Weichai Power (000338.SZ) should be considered. For transformer and switchgear suppliers, attention should be paid to companies such as Hainan Jinpan Smart Technology (688676.SH), Guangdong Mingyang Electric (301291.SZ), Eaglerise Electric & Electronic (002922.SZ). Risk warning: Data center construction demand is below expectations; technological iteration risks; intensified industry competition.