Huaxi: AI development phase is in the critical acceleration period of Scale up and Scale out. The sector suggests a relatively cautious, neutral configuration.

Huaxi released a research report stating that in the AI era, data storage is transitioning from traditional capacity-based to "AI-native" high-performance, low-latency. The firm remains optimistic about the upgrade of Scale up optical cabinets, opportunities for domestic manufacturers to upgrade in industries such as power supply and liquid cooling, increased demand for domestic computing power including chips, switches, servers, as well as opportunities in the market for computing power leasing and AIDC brought about by accelerated capital expenditure by CSP manufacturers. The firm also recommends continued focus on the commercial aerospace sector during the Two Sessions, with a particular emphasis on suppliers of components and chips related to low-orbit satellites. Huaxi's main points are as follows: Focus on several major AI events this week, including GTC+ in Shanghai, the Optical Expo, and the Huawei Partners Conference (1) Catalyzing the Domestic Computing Power Ecosystem: Huawei's China Partners Conference 2026 + AI Storage New Product Launch at the Data Storage Summit, the Ascend ecosystem and the "3+1" AI data platform accelerating the full cycle of AI implementation The firm believes that in the AI era, data storage is transitioning from traditional capacity-based to "AI-native" high-performance, low-latency. With the continuous enhancement of large model capabilities in China and the advantage of power infrastructure, applications such as OpenClaw are catalyzing a surge in token demand, coupled with the Two Sessions' policies on "artificial intelligence+" and "algorithm-electric synergy" new infrastructure, AI applications are expected to accelerate implementation. The Huawei double summit this time will drive the closure of the Ascend computing power, AI intelligence body, and AI full-process data pedestal, helping to enhance China's long-term AI competitive strength. Related beneficiaries mainly include: Huawei's industrial chain and AI applications (Digital China Group, Talkweb Information System, Beijing Teamsun Technology, Shijiazhuang ChangShan Beiming Technology, etc.); AI storage (Changjiang Storage, Digital China Group, Shennan Circuits, GigaDevice Semiconductor Inc., Unigroup Guoxin Microelectronics, Luxshare Precision Industry, etc.). (2) NVIDIA GTC 2026 + the Optical Expo in Munich and Shanghai, LPX reasoning architecture and CPO optical interconnection driving the double wheel of light module/liquid cooling/switch industry chain The firm believes that the introduction of CPO/NPO in Scale-up interconnection will greatly enhance the market space for optical interconnection, with steadily increasing orders for pluggable optical modules, and rapid growth in the performance of optical modules and PCB/liquid cooling related manufacturers. Overseas breakthroughs in computing architecture will complement domestic computing power, catalyzing the global upgrade of AI infrastructure. Related beneficiaries mainly include: AI computing power/GPU/optical modules/liquid cooling/PCB/servers (Industrial Fulian, Suzhou TFC Optical Communication, Eoptolink Technology Inc., Zhongji Innolight, Yuanjie Semiconductor Technology, Wuxi Taclink Optoelectronics Technology, Hangzhou Zhonhen Electric, Kehua Data Co., Ltd., Beijing Relpow Technology, Shenzhen Envicool Technology, Guangzhou Goaland Energy Conservation Tech, Victory Giant Technology); laser equipment and optical communication (Hgtech, Optowide Technologies, Suzhou TFC Optical Communication, Wuhan Raycus Fiber Laser Technologies, Advanced Fiber Resources, LianChuang Electronic Technology, etc.). Current viewpoint At the current moment, geopolitical risks continue to be present, market risk appetite is reduced, which may affect short-term market volatility. AI remains a key investment theme in the near term, and the firm expects the market to continue to be volatile, with a recommendation to be relatively cautious about sectors and maintain a neutral stance. The firm believes that the current stage of AI development is still in a key acceleration period for Scale up and Scale out, and with the gradual enrichment of the supply system for related computing power chips, the firm believes that the application development is still accelerating the demand for tokens, and related underlying computing power infrastructure is still in an expansion period. The firm remains optimistic about the upgrade of Scale up optical cabinets, opportunities for domestic manufacturers to upgrade in industries such as power supply and liquid cooling, increased demand for domestic computing power including chips, switches, servers, as well as opportunities in the market for computing power leasing and AIDC brought about by accelerated capital expenditure by CSP manufacturers. Furthermore, the firm continues to recommend focusing on the commercial aerospace sector during the Two Sessions, with a particular emphasis on suppliers of components and chips related to low-orbit satellites. Risk warning Uncertainty arising from geopolitical conflicts; progress in related technologies and applications falling short of expectations; policy implementation being slower than anticipated; systemic risks.