CITIC SEC: The optimistic narrative of US stocks is likely to continue in the short term. It is recommended to follow the logic of "walking and watching".

CITIC SEC released a research report stating that, with favorable macroeconomic support at present, coupled with strong micro supply chain data and the strategic importance of AI technology bringing about the FOMO mentality of technology giants, the narrative of AI CAPEX is likely to continue in the short term. However, the high unpredictability of short-term AI technology and macroeconomic expectations also makes it possible for optimistic market sentiment to reverse at any time. Therefore, strategically, the institution still recommends adhering to the logic of "walk and see", closely monitoring core variables such as macroeconomic expectations, guidance from technology giants, and progress in the AI industry. In the short term, attention should be focused on: the progress of OpenAI products & monetization, the release of Gemini 3.0, US stock software+AI monetization guidance, Q4 financial reports of technology giants, and the pace of interest rate cuts by the Federal Reserve. CITIC SEC's main points are as follows: Market concerns: OpenAI, industry financing structure, AI ROI, etc. Since September, OpenAI has signed contracts for AI computing power purchase totaling over 1 trillion US dollars with companies such as Oracle, NVIDIA, AMD, Broadcom, etc. Stocks related to AI computing power in the US have rapidly risen, but market divergences and concerns have also begun to increase, mainly reflected in: 1) The authenticity of OpenAI's demand, its ability to fulfill orders, and the main intention behind the huge investment amount. Whether OpenAI has already seen the huge demand in the world of AI, or a shrewd commercial calculation, is difficult to judge in the short term. 2) Systemic risks brought about by circular financing, debt financing, etc. Currently, some companies have shifted from relying on free funds, equity sales, etc., over the past two years, to more aggressive debt financing, supplier financing, and embedded various innovative financial arrangements. 3) The current AI industry is still far from ideal in terms of ROI. The balance between AI industry input and output is still fragile, and the balance of AI commerce (input, output) needs to rely more on revenue growth and efficiency improvements. Otherwise, the continued rapid growth of AI CAPEX will be unsustainable. The institution's judgment: Market optimistic sentiment is likely to continue in the short term, but a potential reversal is also possible at any time. In the short term, the institution judges that the optimistic narrative of US stock AI still has multiple factors supporting it, and will likely dominate: 1) In the short term, micro supply chain data shows that AI computing chips & complete machine shipments are smooth, and memory chip prices for spot and contract are consistently rising, with representative companies giving optimistic guidance. 2) The "FOMO" mentality of technology giants. The institution estimates that by 2025, the combined CAPEX of the four major North American technology giants will account for over 70% of the operating cash flow for the same period, but remains within the bearable range. Considering the strategic value of AI, technology giants are still fully investing in the short term. 3) Favorable macro environment. The three major adjustments to the US stock AI computing power since 2024 have all been due to the market's increasing concerns about the US macroeconomy. The currently broadened fiscal policy and interest rate cuts are expected to provide significant support for the capital expenditure of technology giants on AI. The debate between bullish and bearish in the current market is expected to continue over the next few quarters, and is likely to not yet form a clear conclusion. However, faced with the high unpredictability of short-term AI technology and macroeconomic expectations, there is also a potential for a reversal in market sentiment. Subsequent focus areas: OpenAI, technology giants, macroeconomic expectations, AI monetization, etc. In the past few years, compared to the long-term grand narrative in the AI industry, investments in AI computing power have followed a short-term logic of "walk and see". Therefore, instead of being entangled in specific conclusions, it may be more beneficial to consider from a different perspective, that is, under what circumstances would the market's current expectations undergo significant fluctuations, or even reverse: 1) OpenAI. The market is expected to continuously adjust its judgment on the ability of OpenAI to fulfill its massive orders through observation of its algorithm leadership, progress in monetization implementation, and effects. In the short term, attention will be focused on Google's upcoming release of the Gemini 3.0 model. 2) AI monetization. Following the internet, the breakthrough in commercialization of startups and software SaaS is key to the continued advancement of the AI industry, especially in software SaaS. The reflection of US stock software+AI income is expected to be seen in Q3/Q4, and the October Q3 financial report may be the best observation window. 3) Guidance from technology giants. The US technology giants are expected to release their 2025 Q4 financial reports at the end of January to early February 2026. At that time, Wall Street is expected to reassess global AI CAPEX scale, continuity, as well as the balance between enterprise-level AI investment and shareholder returns, based on core guidance data. 4) Macro expectations. The combination of broad fiscal policy and interest rate cuts is driving the euphoria of the market's animal spirits, and supporting optimistic expectations for AI computing power. The subsequent pace of interest rate cuts by the Federal Reserve will be one of the important variables that the institution will observe. Risk warnings: Repeated risks of interest rate cuts by the Federal Reserve; escalation of geopolitical conflicts; risks of AI core technology development falling short of expectations; continuous tightening of policy regulations in the technology sector; risks of global macroeconomic recovery falling short of expectations; economic fluctuations leading to IT spending by European and American companies falling short of expectations; potential ethical, moral, and privacy risks of AI, etc.