Industrial: Hong Kong stock Internet is expected to become an important direction for the diffusion of AI trends.

Industrial released a research report stating that the domestic computing power chain is currently catching up with the North American computing power chain, and the AI market is spreading within the computing power chain. Hong Kong internet stocks have a very high positive correlation with the domestic computing power due to their trading attributes, indicating that within the AI market, the spread of computing power from North America to domestic sources is one of the important trends. Furthermore, from an overseas perspective, cloud service providers represented by Hong Kong internet stocks are also expected to be the direction for the subsequent rise in the domestic AI market. The main viewpoints of Industrial are as follows: The bank has selected 47 leading companies in the North American computing power chain (such as optical modules and PCBs) and 41 leading companies in the domestic computing power chain (such as the semiconductor industry chain and storage), constructing the "North American Computing Power Chain" and "Domestic Computing Power Chain" indices to observe the spread of computing power within the industry. Recently, the domestic computing power chain has been catching up with the North American computing power chain, indicating that the AI market is spreading within the computing power chain. The bank has compared the trends of the North American computing power chain relative to the domestic computing power chain, with the trends of Hong Kong internet stocks represented by Alibaba (09988), finding a very high positive correlation between the two. This indicates that within the AI industry, in addition to the spread of computing power from North America to domestic sources, the spread of Hang Seng technology is also an important trend. The logic behind this is relatively easy to understand. On one hand, the capital expenditures and guidance of major Hong Kong internet companies for the domestic computing power chain are similar to the relationship between North American CSP manufacturers and the North American computing power chain, leading to a mutually beneficial relationship. Therefore, Hong Kong internet stocks themselves have the trading attributes of domestic computing power. On the other hand, Hong Kong internet platforms with the best social scenes and ecosystems are also the first to benefit from the application of AI, therefore also holding the trading attributes of AI applications. Both are important directions for the spread of the domestic AI market. Additionally, from an overseas perspective, cloud service providers represented by Hong Kong internet stocks are expected to be the direction for the subsequent rise in the domestic AI market. Since April, North American cloud service provider stocks have started to recover, with several major CSP manufacturers recently reporting better-than-expected performance and Capex guidance leading to a significant increase in stock prices. In comparison, domestic cloud service providers have lagged behind in terms of stock price increases and are expected to be the direction for the subsequent rise in the domestic market. Several major Hong Kong internet companies will also begin reporting their financial results in May, so it is important to pay attention to their descriptions and guidance regarding AI business and capital expenditures, which could catalyze the domestic AI market.