CMSC: Overall profit recovery but individual stock differentiation is evident; the AI sector shows high prosperity.

CMSC has released a research report stating that the computer industry experienced significant operational improvement in the first half of 2026, with overall revenue steadily increasing and net profit attributable to shareholders, as well as net profit after deducting non-recurring items, seeing substantial enhancements. However, the median growth rate of individual stock net profits turned negative. In terms of growth quality, the industry's gross margin slightly improved in the first half of 2026, while the overall expense ratio narrowed, and operational cash flow showed significant improvement in the second quarter. Among these, AI serves as the core growth engine of the industry, with outstanding performance in AI computing power infrastructure, AI data services, and AI application sub-sectors. It is recommended to focus on the core targets in the relevant industrial chain. The main viewpoints of CMSC are as follows: From a growth perspective, in the first half of 2026, the industrys overall revenue steadily increased, net profit attributable to shareholders and net profit after deducting non-recurring items saw substantial enhancements, yet the median growth rate of individual stock net profits turned negative. In the first half of 2026, the computer industry achieved a total revenue of 562.507 billion yuan, representing a year-on-year increase of 9.21%, with growth rate decreasing by 3.93 percentage points compared to the previous year; the median revenue growth rate of individual stocks was 2.24%. The industry's net profit attributable to shareholders totaled 13.855 billion yuan, marking a significant year-on-year increase of 115.68%; however, the median growth rate of net profit attributable to shareholders of individual stocks was -6.90%, shifting from positive to negative; net profit after deducting non-recurring items totaled 7.440 billion yuan, with a year-on-year increase of 501.06%; the median growth rate of net profit after deducting non-recurring items for individual stocks was -4.76%, changing from positive to negative. In terms of distribution, 56.42% of companies in the first half of 2026 achieved a year-on-year revenue increase (compared to 56.59% in the same period last year), with 5.07% of companies showing revenue growth over 50%, and 51.34% in the range of 0% to 50%; 45.97% of companies achieved growth in net profit, turned losses into profits, or reduced losses (compared to 55.09% in the same period last year), among which 9.85% of companies had a significant increase in net profit (>=50%), 10.45% saw a slight increase (0%-50%), 7.46% turned losses into profits, and 17.31% reduced losses. In the second quarter, the industrys revenue showed a year-on-year increase of 13.46%, with growth rate improving by 4.50 percentage points, and the median growth rate of individual stocks was 2.26%; the net profit attributable to shareholders increased by 70.61% year-on-year, while the median growth rate for individual stocks was -4.43%, turning from positive to negative; net profit after deducting non-recurring items increased by 71.74% year-on-year, with the median growth rate for individual stocks dropping to -7.56%, also changing from positive to negative. In terms of distribution, 54.33% of companies achieved revenue growth year-on-year (last year it was 56.29%); and 47.76% of companies recorded growth in net profit, turned losses into profits, or reduced losses (compared to 55.39% in the same period last year). From the perspective of growth quality, in the first half of 2026, the industrys overall gross margin slightly improved, the expense ratio narrowed overall, and the operational cash flow significantly improved in the second quarter. In the first half of 2026, the industrys overall gross margin was 22.40%, an increase of 0.11 percentage points year-on-year. The total expense ratio was 20.53%, down by 0.81 percentage points year-on-year, with a sales expense ratio of 6.32%, a decrease of 0.56 percentage points year-on-year; the management expense ratio was 5.09%, down by 0.44 percentage points year-on-year; and the R&D expense ratio was 8.52%, a decrease of 0.31 percentage points year-on-year. In the second quarter, the overall gross margin of the industry was 22.88%, down by 0.51 percentage points year-on-year; the total expense ratio was 18.99%, down by 1.15 percentage points year-on-year. In terms of cash flow, the industrys overall net cash flow from operations in the first half of 2026 was -44.422 billion yuan, which represents an expanded net outflow compared to the same period last year; the overall net cash flow from operations in the second quarter was 5.863 billion yuan, substantially improving compared to the same period last year. The total amount of advances from customers and contract liabilities in the first half of 2026 was 140.623 billion yuan, increasing by 11.91% year-on-year; during the same period, the total amount of accounts receivable and contract assets was 362.933 billion yuan, decreasing by 2.74% year-on-year, indicating slight effectiveness in managing accounts receivable in the industry. In terms of sub-sectors, the AI industrial chain performed strongly. On the revenue side, in the first half of 2026, most sectors achieved revenue growth, with five out of the eight key sub-sectors monitored by this firm recording positive revenue growth. The median revenue growth rates among these top three sectors were AI computing power infrastructure, AI data services, and AI applications, with year-on-year growth of 24.09% / 19.87% / 5.95%, respectively. Compared to the first half of 2025, revenue growth in AI computing power infrastructure, AI data services, medical IT, and cybersecurity showed acceleration. On the profit side, six sectors had positive median growth rates for net profit after deducting non-recurring items, with AI computing power infrastructure, AI applications, and AI data services ranking among the top three at 78.63% / 25.19% / 10.91%, respectively. Compared to the first half of 2025, the growth rates of net profit after deducting non-recurring items in AI computing power infrastructure, AI applications, cybersecurity, and medical IT accelerated in the first half of 2026. In the second quarter, five sectors achieved positive revenue growth, with AI computing power infrastructure, AI data services, and AI applications seeing the highest median growth rates of 34.83% / 9.46% / 6.38%, respectively; the revenue growth year-on-year accelerated in AI computing power infrastructure, financial IT, and medical IT. Risk warnings: Policy support for innovation and security may fall short of expectations; technological development in the AI industry may be below expectations; industry competition may intensify; and technological innovation may not meet expectations.