Shanxi: Ali (09988) and Tencent (00700) catalyze billions of daily activities, optimistic about domestic computing power mainline.

Shanxi released a research report stating that Alibaba (09988) announced its capital expenditure plan for the next three years: it is expected to exceed the sum of the past ten years. Last week, Alibaba released its third-quarter financial report for the 2025 fiscal year, with its core business accelerating growth. Revenue from AI-related products has achieved triple-digit year-on-year growth for six consecutive quarters, and AI + cloud is driving continuous revenue growth for Alibaba Cloud. Shanxi believes that the success of DeepSeek has enabled major domestic cloud computing companies to see the explosive growth of AI applications. Corresponding to the overseas "chatGPT moment", Tencent (00700), ByteDance, Baidu (09888), telecommunications operators, and other companies will also follow suit. Domestic cloud computing will at least maintain high capital expenditure for the next three years. Shanxi points out that it is advisable to increase investment in the "large computing power" theme and strategically position oneself in the "large chip" and "high bandwidth" themes. The domestic IDC industry is shifting towards a broad cyclical prosperity, and may experience a wave of revalued industries first. The logic behind the revaluation of IDC lies in the transition from destocking to capacity ordering logic. IDC companies that have already secured land and energy consumption may foresee higher growth rates and enjoy higher valuations in the future. Additionally, all segments of IDC infrastructure will benefit, and we recommend focusing on areas where penetration rates are increasing, such as HVDC, liquid cooling, fiber optic cabling, and AEC copper connections. Shanxi believes that the logic of "large chips" will also unfold as the US computational power classification policy is set to be implemented in May, and the action of showcasing key domestic computational technology will commence, with social capital leaning towards domestic chips. Shanxi's main points are as follows: Industry Trends: Alibaba's financial report announces plans for future capital expenditures for the next three years, expected to exceed the sum of the past ten years. Last week, Alibaba released its third-quarter financial report for the 2025 fiscal year, with its core business accelerating growth. Revenue from AI-related products has achieved triple-digit year-on-year growth for six consecutive quarters, and AI + cloud is driving continuous revenue growth for Alibaba Cloud. Alibaba has stated that it will actively invest in AI infrastructure construction, with the group expected to invest more in cloud and AI infrastructure in the next three years than in the past ten years. A new wave of data center investments is looming. At the same time, Alibaba Cloud announced an increase in overseas cloud infrastructure construction, with new IDC investments planned in five countries around the world, including Thailand, South Korea, the Philippines, Malaysia, and Mexico. This will also lead to significant improvements in expectations for IDC and IDCInfra companies related to Alibaba Cloud. We believe that the success of DeepSeek has enabled major domestic cloud computing companies to see the explosive growth of AI applications. Corresponding to the overseas "chatGPT moment", Tencent, ByteDance, Baidu, telecommunications operators, and other companies will also follow suit, with domestic cloud computing maintaining high capital expenditure for at least 3 years. State-owned Assets Supervision and Administration Commission deploys "AI+ special actions" for central state-owned enterprises, and the Ministry of Industry and Information Technology organizes "Strong Foundation for Computing Power" action. On February 19, the State-owned Assets Supervision and Administration Commission organized a meeting on the deepening deployment of the "AI+" special actions for central enterprises, emphasizing the promotion of central enterprises to integrate into the national computing power layout, deepen cooperation with leading private enterprises and research institutions, land a batch of high-value industry application scenarios, significantly improve intelligent computing power supply capabilities, steadily promote data set construction, accelerate the construction of large models, and make positive progress in key areas of artificial intelligence. According to IT Home reports, the National Artificial Intelligence Industry Investment Fund was recently established, with a scale of 60.1 billion yuan. We believe that domestically, at the level of AI computing power construction, there is a top-level design and institutional advantages led by central state-owned enterprises, which are expected to drive various industries to increase their capital expenditure on IT equipment, benefiting public cloud, private cloud, and integrated machines. On February 20, the Ministry of Industry and Information Technology issued a notice on organizing the "Strong Foundation for Computing Power" action, focusing on research on intelligent computing power management, computing power acceleration technologies to enhance computing performance and efficiency; storage research on multiple media storage device management, cross-domain storage resource pool collaboration technologies, and the realization of reliable and flexible storage by Beijing Vastdata Technology; network research to break through technologies such as in-network and inter-network calculation, and promote high-speed interconnection of computing power resources. The "action" aims at computing power network construction, super node technology, etc. It is expected that by 2026, a set of support for trillions of parameters of training and reasoning integrated intellectual computing platform will be developed, and domestic computational power industrial chains such as Ascend will accelerate. Investment recommendation: It is advisable to increase investment in the "large computing power" theme and strategically position in the "large chip" and "high bandwidth" themes. The domestic IDC industry is shifting towards a broad cyclical prosperity, and may experience a wave of revalued industries first. The logic behind the revaluation of IDC lies in the transition from destocking to capacity ordering logic. IDC companies that have already secured land and energy consumption may foresee higher growth rates and enjoy higher valuations in the future. All segments of IDC infrastructures will benefit, and we recommend focusing on areas with increasing penetration rates such as HVDC, liquid cooling, fiber optic cabling, and AEC copper connections. We believe that the logic of "large chips" will also unfold as the US computational power classification policy is set to be implemented in May, and the action of showcasing key domestic computational technology will commence, with social capital leaning towards domestic chips. Additionally, last week, grok3 claimed to have performance surpassing all mainstream large models on the market using a 200,000-card cluster for training. This indicates that the scaling law of pretraining is still effective, but the hidden computational cost of pretraining is often much greater. Therefore, North American tech giants have not reduced their capital expenditure plans due to the decrease in costs from DeepSeek, and instead believe that "model open-source fairness" is conducive to an explosion of inference computing power. Finally, NVIDIA is expected to release its fourth-quarter financial performance for the 25 fiscal year on February 26, which may release information about GB300 and CPO product lines. Combined with the GTC conference in mid-March, overseas computational power chains are advised to pay attention. Overall market: This week (February 17 to February 23, 2025), the overall market rose, with the Shenwan Communications Index up 8.09%, the Sci-Tech Innovation Board Index up 7.07%, the Growth Enterprise Market Index up 2.99%, the Shenzhen Component Index up 2.25%, the Shanghai-Shenzhen 300 up 1.00%, and the Shanghai Composite Index up 0.97%. The top three sectors with the highest weekly gains were liquid cooling (+18.2%), IDC (+16.7%), and connections.Stocks rose by 13.5%. Looking at individual stocks, Guangdong Aofei Data Technology, Genew Technologies, Shenzhen Envicool Technology, Guangzhou Goaland Energy Conservation Tech, and Shanghai AtHub were the top gainers, with increases of +42.77%, +19.51%, +19.08%, +19.04%, and +18.39%, respectively. Beijing Kingsoft Office Software, Inc, Shenzhen Bestek Technology, MeiG Smart Technology, China Spacesat, and Beijing InHand Networks Technology were at the bottom, with decreases of -3.23%, -2.79%, -0.22%, +0.91%, and +0.98%, respectively."Je suis dsol, je ne parle pas franais." "I'm sorry, I don't speak French."