CITIC SEC: Still bullish on US tech stocks, currently prefer the mid-to-back end of the overseas computing power chain.

CITIC SEC released a research report stating that in the process of popularizing AI, end users do not always choose the most computationally intensive or best performing model, but often face financial constraints related to token budgets. The strong performance of computational hardware in the second quarter of this year was mainly driven by price increases rather than volume growth. As the market focus shifts from scarcity to sustainability, overseas markets, represented by the South Korean stock market, are also facing adjustments. Computational power is not in surplus, but the evolution of bargaining power is becoming increasingly crucial. It is noted that the adoption rate of AI in American companies is increasing, and the overall technology investment intensity in various business sectors aligns with long-term trends. It is believed that market competition mechanisms will drive more companies to use AI to improve work efficiency, leading to a demand for new computational services, AI models, and applications. The technology sector in the US is still favored, with a preference for the midstream and downstream segments of the overseas computational power chain, and a positive outlook on the attractiveness of the US stock market compared to the Japanese and South Korean stock markets. Key points from CITIC SEC include: - Recent overseas markets have heightened doubts about the sustainability of AI narratives. - The US stock market saw a structural rally driven by the technology sector in the first half of this year, with stock prices of companies in the AI industry chain showing differentiation in June. Computational hardware was a star sector in the global market in the second quarter. However, since late June, there have been numerous news events causing volatility in the technology sector, leading to severe fluctuations in overseas markets, particularly in South Korea. The global consensus on investing in the semiconductor industry seems to be loosening. - The strong performance of overseas computational hardware is mainly driven by price increases rather than volume growth, following a typical cyclical logic. - When the market focus shifts from scarcity to sustainability, the economic considerations of AI investments become more important. - After an ultimate rally, it is time to find more resilient trading directions. Risks include unexpected changes in global market liquidity or sentiment, technological advancements, corporate performance, policy changes, or unforeseen events impacting beyond expectations, and overseas economic momentum falling short of expectations or inflation exceeding expectations.