Bank of China International: Focus on the "rising price spread" market, with key focus on storage chips, gas turbines, SOFC batteries, STT, energy storage, etc.

The weekly report on strategy from Bank of China International points out that the market is gathering momentum for short-term volatility, focusing on the "price hike diffusion" trend. It is important to pay attention to the "price hike" trend in the energy storage industry chain, especially the potential over-expected contribution of the upstream and midstream segments to profitability elasticity. In the recent period, prices of energy storage and lithium battery midstream materials have significantly increased, mainly as a result of short-term supply-demand mismatch, growth in energy storage demand, and optimization of industry structure. The energy storage market is officially replacing the power battery as a new direction for demand growth in the lithium battery sector. In the development trend of the AI industry, the high configuration value of the scarce links in the entire industry chain and the related configuration value of the energy storage industry chain are still worth paying attention to. In terms of the trend judgment of the overall profit distribution of various industries in the next stage of the market, there is not much difference in the market's expectation for the continuation of the high prosperity trend in technology-related industries, but there is still a certain difference in the profit recovery ability of traditional upstream and midstream industries. We believe that this difference constitutes the core expectation difference in the judgment of non-financial profit elasticity of the entire A-share market in the future. The importance and urgency of the "anti-involution" work may still be in the accelerated stage. Therefore, the "price hike diffusion" trend against the background of the "anti-involution" expectation difference is worth paying high attention to. From computing power to electricity storage, the AI market has not stopped but intensified rotation, with strong demand for AI, but attention should be paid to the shortage of the supply side. Tencent has lowered its annual capital expenditure guidance, mainly due to changes in AI chip supply, highlighting the shortage of storage and electricity. Samsung Electronics raised the prices of some memory chips by 30%-60% this month compared to September, and top manufacturers such as Microsoft and OpenAI have openly stated that they are facing electricity shortages. Against the backdrop of "strong demand, tight supply," it is recommended to focus on AI storage and electricity, which have the most prominent supply contradictions at present and still offer cost-effective configurations with limited previous price increases, with a focus on storage chips, gas turbines, SOFC batteries, STT, and energy storage. Computing power, especially domestic computing power, is still ongoing, but there may be a need to wait for a new "ignition spark" in the short term.