CITIC Securities: Conditions for the next tech rally are gradually accumulating; maintain cautious optimism.

CITIC Securities research report states that, unlike the 2022 high-inflation and aggressive rate-hike cycle, when valuations and earnings were revised down simultaneously, although the Fed and the Bank of Japan raised rates successively in September, recent U.S. economic activity, AI capital expenditure, and tech leader earnings have remained resilient. This round of global tech stock adjustment is mainly reflected in valuation contraction rather than earnings downgrades. Going forward, EPS and cash flow will remain the main thread of market pricing. Despite U.S. long-term bond yields repeatedly hitting new highs, U.S. tech stocks, supported by EPS, have already been the first to reach new highs. CITIC Securities believes that the "CapExROICEPS" transmission in the computing power industry has been preliminarily verified. Capital expenditure growth in 20272028 will support upward earnings in the computing power chain, providing solid support for the subsequent tech rally. At the same time, accelerated RSI progress, major version iterations of domestic models, and Meta Muse validating C-end Agent demand are driving market focus to extend from infrastructure investment to model capabilities, personal intelligent agents, and application monetization. Looking ahead to the fourth quarter, the conditions for the next round of tech rally are gradually accumulating. October is a verification period for macroeconomic data, third-quarter earnings, new model iterations, and new product commercialization. CITIC Securities maintains a cautiously optimistic stance and recommends adhering to structure over position, focusing on structural opportunities such as Hong Kong stock model iterations, internet platforms, hardware technology upgrades, and domestic semiconductor equipment.