China Securities Co., Ltd.: Is the AI bubble forming?

China Securities Co., Ltd. released a research report stating that the expectation of a rate cut by the Federal Reserve and the weakening trend of the US dollar credit support the medium and long-term logic of gold. Countries such as Cambodia increasing their gold reserves further strengthen the global de-dollarization trend. It is recommended to timely layout gold investment opportunities and buy on dips. In addition, the AI industry chain continues to extend, with opportunities in the upstream storage chip sector (such as tight supply of DDR5 and rising prices of tungsten hexafluoride), as well as energy storage (lithium battery demand expected to exceed 30%). Policies clearly support the deep integration of AI and manufacturing, driving dual empowerment in "intelligent industrialization" and "industrial intelligence", continue to focus on investment opportunities in the upstream and downstream of the AI industry chain, the industry chain is on a long-term upward trend. Key points from China Securities Co., Ltd.: The weakening of the US dollar credit, continue to focus on gold Recently, according to reports from media such as Observer, Cambodia is expected to become one of the first countries to establish gold reserves in China. This move is of great symbolic significance, indicating that China has made preliminary progress in promoting the construction of an international gold trading and reserve center, and also reflects the strategic considerations of some countries for diversification and de-dollarization in international asset allocation. In the current global macro environment, geopolitical uncertainties are rising, with many central banks continuing to increase their gold holdings, the weakening of US dollar credit, and continued focus on gold. Artificial intelligence extends to the upstream and downstream industries, focusing on the upstream and downstream industries of non-ferrous metals, electricity, AI applications, and more. Artificial intelligence technology and applications are developing at an unprecedented pace, their impact is constantly expanding, forming a complete industry chain ecosystem from upstream critical materials, hardware equipment, to midstream computing power infrastructure, and downstream industry applications, and significantly driving related industries. In the upstream sector, new changes in the supply and demand situation are emerging: (1) In the field of storage chips, the three major original factories have temporarily suspended DDR5 product quotations. Industry information shows that Samsung Electronics was the first to suspend DDR5 DRAM contract quotations in October, followed by major suppliers such as SK Hynix and Micron. This move may lead to a short-term "stoppage of supplies" in the supply chain, and the resumption of quotations may be delayed until mid-November. At the same time, the situation of supply shortage of storage chips continues, with backend testing and packaging companies such as Unigroup, Nanya, and Huatai already receiving additional orders from customers, and many manufacturers planning to raise prices, with the prices expected to increase by high single digits to double-digit percentages, and the price adjustments are expected to take place as soon as the end of this year to gradually land next year. (2) Key semiconductor material tungsten hexafluoride (WF6) is facing a significant price increase. Due to the rapid rise in tungsten raw material prices, WF6 suppliers such as SK Specialty, Hoosung, Kondo Denka have notified semiconductor manufacturers such as Samsung and SK Hynix that they plan to raise supply prices by 70% to 90% starting next year, which will bring new pressure on chip manufacturing costs. (3) The demand for computing power drives the growth of the energy storage industry. With the rapid advancement of global data center construction, the demand for backup power and energy management is soaring, bringing huge market space for energy storage systems. Industry leaders have received a large number of orders, and it is expected to drive lithium battery demand to achieve over 30% growth next year, fostering important investment opportunities in positive and negative materials, battery manufacturing, system integration and other aspects. At the downstream and application end, policy guidance and industrial integration are advancing together The Minister of Industry and Information Technology recently pointed out in an article that efforts should be made to promote the "dual empowerment" of artificial intelligence innovation and manufacturing application. On the one hand, strengthen technological supply, promote "intelligent industrialization", enhance the core technology independent and controllable capabilities of AI; on the other hand, deepen the empowerment of applications, accelerate "industrial intelligence", promote the landing and penetration of AI technology in industrial scenarios. By constructing a healthy industrial ecosystem, realizing the high-quality growth of artificial intelligence, and providing all-round and in-depth support for the construction of a new type of industrialization. Industry configuration viewpoint: Focus areas: (1) Gold: bullish in the short and medium term, catalyzed by the short-term expectation of a rate cut by the Federal Reserve, and weakened US dollar credit in the medium to long term, buying on dips for gold positions; (2) Focus on the upstream and downstream industrial chain of AI and computing power, including non-ferrous metals, energy storage, batteries, chemical materials, AI applications and other direction with relatively low valuations.