Industrial Securities released a research report stating that the current upward trend in the computer sector is driven by the synergy of industrial innovation, policy support, and earnings improvement. Key factors influencing future trends include the realization of AI innovations, the sustainability and strength of earnings recovery, and the potential for deeper policy support. Identifying structural opportunities will be the core focus of sector investments in the coming year.
The report suggests a shift from last year's focus on small- and mid-cap rebound plays to a more balanced approach. Looking ahead to the 15th Five-Year Plan, themes such as technological self-reliance and new productive forces will dominate. Investors are advised to adopt a balanced strategy, emphasizing breakthroughs in AI and localization, as well as cutting-edge innovations.
Key insights from Industrial Securities include:
**AI Applications: From 1 to N, Ecosystem Matures** 1) **Model Development**: Scaling Law continues to drive performance improvements, intensifying competition among large language models. Domestic models are catching up rapidly, with Nano Banana Pro marking a multimodal inflection point. Focus on iFlytek. 2) **Enterprise AI**: The primary battleground for commercialization, AI applications are accelerating in industries such as manufacturing, commerce, and power. Watch for Supcon, Glodon, HCR, Nancal Technology, SGIT, and Sciyon. 3) **General AI**: Major tech firms are aggressively expanding into office, marketing, programming, finance, and autonomous driving. Monitor Kingsoft Office, Hehe Information, Foxit, Hande, Newland, Yonyou, Tax Friend, Tonghuashun, Hundsun, Thundersoft, and Ezviz.
**Localization: Deep Breakthroughs in Core Technologies** 1) **Domestic Computing**: Rising global demand and increased capital expenditures by domestic giants are boosting local players. Key stocks include Hygon, Sugon, Digital China, Inspur, Unisplendour, Moore Threads, Loongson, Huibo, and JWIPC. 2) **Domestic Software**: Full-stack ecosystems are emerging in EDA, operating systems, and databases. Track Primarius, China Software, Dameng, Taiji, and Apex. 3) **Cybersecurity**: With the revised Cybersecurity Law and AI security regulations taking effect, breakthroughs in quantum-resistant cryptography are notable. Focus on Sangfor, Sansec, and Topsec.
**Emerging Tech: Pioneering Innovations** 1) **Quantum Technology**: China leads in quantum computing, communication, and measurement. Watch QuantumCTek and Digital China. 2) **Brain-Computer Interface**: Entering the 3.0 era, clinical applications show promise. iFlytek is a key player. 3) **Space Information**: Commercial space advancements and AI-driven "space computing" are gaining traction. Monitor GeoVIS, Aerospace Intelligence, and SuperMap.
**Investment Recommendations** Top picks include Hygon, Tonghuashun, Kingsoft Office, iFlytek, Digital China, Hehe Information, Newland, Glodon, Hande, and Nancal Technology.
**Risks**: Uncertainties in AI development returns, geopolitical impacts, and slower-than-expected government demand recovery.
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