CITIC SEC: Computing power is in high demand, driven by both Capex and Token needs, while AI applications are approaching a turning point in value reassessment.

CITIC SEC expects the performance of the computing power sector in 2025 to continue to grow in the background of CSP major factory Capex continuing to be realized, token demand continuously releasing, and product capabilities continuously improving; AI applications show structural highlights, such as AI fintech, AI healthcare, AI data, etc., with outstanding performances, and General Agent applications also showing resilient growth; the overall profitability of the sector is expected to improve significantly. Looking ahead to 2026, the computing power sector is expected to continue to thrive, with opportunities for AI applications at a turning point. Income side: Computing power is in high demand, with bright application points. CITIC SEC expects the computing power sector to maintain high growth in 2025 against the backdrop of CSP major factory Capex continuing to be realized and token demand continuously releasing. CITIC SEC expects AI applications to show structural highlights, with outstanding performance in areas such as AI fintech, AI healthcare, AI data, etc., and General Agent applications showing resilient growth, with notable performances in areas such as innovation, satellite internet, etc. Profit side: Significant improvement in overall profitability of the sector. It is expected that the profit growth of the computing power sector in 2025 will be high, with some AI application companies showing high profit elasticity, and most loss-making companies are generally narrowing their losses or turning profitable, leading to a significant improvement in the overall profitability of the sector. Investment outlook for 2026: Seize the turning point in domestic AI, and expect sustained high growth in domestic computing power. AI applications are at a turning point opportunity in the background of model innovation, overseas expansion, and domestic demand support. Looking ahead to 2026, the competition for domestic computing power is gradually transitioning from single-card computing power to super-node level competition, with super-node system-level capabilities becoming an important factor in the next phase of competition for computing power companies. At the same time, with major CSP companies accelerating Capex investment and the continuous release of token demand, the development of computing power has high certainty. On the AI application front, the improvement in model capabilities combined with new opportunities for overseas expansion, the turning point in AI applications has arrived, and the value is expected to be re-evaluated. AI applications are gradually transitioning from scenarios such as Chatbot, Coding, search, customer service to a wide range of multimodal, Agent, embodied intelligence, and other scenarios; domestic AI application companies are accelerating their layout in overseas markets, seizing global market shares in AI applications, and bringing new commercial value from overseas business. In terms of domestic demand, policies are expected to continue to increase support for domestic technology in areas such as satellite, healthcare, and consumption. CITIC SEC believes that the turning point for domestic AI has arrived. Risk factors: Risks of performance forecasts deviating from actual company disclosed data; macroeconomic development falling short of expectations; artificial intelligence technology development and progress falling short of expectations; domestic government and enterprise IT expenditures falling short of expectations; intensification of international trade frictions; related industry policies falling short of expectations; overseas market expansion falling short of expectations. Investment strategy: CITIC SEC expects the performance of the computing power sector in 2025 to continue to grow in the background of CSP major factory Capex continuing to be realized, token demand continuously releasing, and product capabilities continuously improving; AI applications are expected to show structural highlights, with outstanding performances in areas such as AI fintech, AI healthcare, AI data, etc., and General Agent applications also show resilient growth; the overall profitability of the sector is also expected to improve significantly. Looking ahead to 2026, the computing power sector is expected to continue to thrive, with opportunities for AI applications at a turning point. Recommendations: 1) AI infrastructure; 2) AI applications; 3) AI healthcare; 4) satellite internet. This article is a reprint from CITIC SEC research, GMTEight editing: Li Junling.