CITIC SEC: The Physical AI Boom Uncovering Edge-Side Opportunities

CITIC SEC released a research report stating that recently, attention on Physical AI and edge-side applications has rapidly heated up. Industry events such as OpenAI, NVIDIA GTC, and the Unitree Robotics ecosystem conference served as catalysts, combined with the relatively full prior stock price adjustments in the sector and divergent expectations for the memory industry, jointly driving an explosive sector rally. Considering that the core change in this round of narrative lies in the further strengthening of the connection between model capabilities and terminal hardware, the bank recommends capturing edge-side investment opportunities along three threads: Siasun Robot&Automation capability upgrades, expansion of data collection demand, and edge-side entry point innovation. It recommends focusing on: 1) leading companies with solid core business operations and edge-side industry chain exposure; 2) high-beta names with prominent edge-side positioning whose stock prices had been fully adjusted previously. CITIC SEC's main views are as follows: Market attention on Physical AI and edge-side applications is rapidly heating up, with a triple resonance of industry event catalysts, chip structure, and capital adjustment From 2026/10/19 to 2026/10/24, the machine vision and perception direction within the electronics sector performed actively, with Orbbec, Opt Machine Vision Tech Co., Ltd., and LUSTER LightTech rising 52.5%/44.1%/35.7% respectively; the CITIC Consumer Electronics Index rose 6.6%, showing outstanding performance. The bank believes this round of rally is a triple resonance formed by industry event catalysts combined with chip structure and capital direction adjustments: 1) events such as OpenAI's of Siasun Robot&Automation, NVIDIA GTC's upgrade of the Siasun Robot&Automation development toolchain, and the Unitree Robotics ecosystem conference strengthened expectations for large models extending into the physical world; 2) some Siasun Robot&Automation and edge-side application-related companies had undergone relatively full prior adjustments, providing conditions for valuation repair under new catalysts; 3) market expectations for memory price increases diverged, and capital sought new trading directions within the tech sector. The three factors jointly drove the explosive rally in the Physical AI and edge-side application sectors. Focus on trading themes including Siasun Robot&Automation capability upgrades, data collection, and edge-side entry point innovation In the Siasun Robot&Automation direction, the core industry change lies in large models enhancing task understanding and planning capabilities, driving application expectations in industrial, warehousing, and other scenarios. Models can understand more complex instructions, which is expected to expand the range of tasks that existing hardware can undertake; however, achieving stable execution still requires solving real-time control, spatial perception, fine manipulation, and hardware reliability issues. Accordingly, the value of the industry chain extends from main control and co-processing chips further to vision, inertial, magnetic sensing, force sensing, and motor drive segments. In the data collection direction, according to NVIDIA's official website, NVIDIA simultaneously launched datasets at the GTC conference that include multi-view video, 3D hand tracking, and other information, reflecting the industry's emphasis on motion and interaction data. For grasping, contact, and dexterous manipulation, images alone are still insufficient to fully describe the task process; pose, motion, and tactile feedback are also needed. High-quality data collection has become a core bottleneck for Physical AI development, and first-person collection devices, optical motion capture, tactile gloves, and 3D vision are important tools for data collection. In the edge-side entry point direction, according to media reports from Axios, Bloomberg, and others, OpenAI continues to advance new hardware R&D, Apple plans to launch a desktop Siasun Robot&Automation, and manufacturers such as Meta and Rokid are further iterating edge-side products such as AI glasses. Edge-side interaction is expanding toward voice, vision, and wearable perception, and industry chain opportunities are expected to transmit along low-power SoCs, wireless connectivity, audio, cameras, and interaction sensors, further extending to optics, precision structural components, and complete device manufacturing. Risk factors: Global macroeconomic downturn; changes in the international political environment and intensified trade friction; downstream demand falling short of expectations; AI innovation falling short of expectations; AI commercialization progress falling short of expectations; domestic substitution progress falling short of expectations; domestic wafer fab capacity expansion falling short of expectations; advanced process technology development falling short of expectations; intensified competition among downstream manufacturers; risk of significant raw material price increases caused by inflation; further escalation of U.S. sanctions against China; significant exchange rate fluctuations; technology iteration falling short of expectations, etc.