CITIC SEC released a research report outlining three potential scenarios for the AI industry over the next 12 months. The firm considers OpenAI facing operational crisis and slowed AI investment as the baseline scenario (60% probability), which it views as the most plausible outcome. Meanwhile, breakthroughs in AI algorithms or a U.S. inflation rebound triggering a bubble burst are deemed low-probability events (20% each). Given high uncertainty around AI advancements and macroeconomic conditions, CITIC SEC advises investors to adopt a cautious "wait-and-see" and contrarian investment strategy while gradually increasing exposure to the application layer (internet and software sectors).
Key views from CITIC SEC:
**AI Bubble: An Unavoidable Discussion** Since October, as market risk appetite declined, investors have begun rationally assessing AI CAPEX sustainability, ROI, commercialization pace, and bubble risks. Short-term debates about an AI bubble remain inconclusive. Based on technological progress, corporate strategies, and macro conditions, CITIC SEC identifies three potential scenarios for global AI development over the next year: 1. **Substantial AI Algorithm Breakthrough (20% probability)** – Unlikely in the near term given incremental improvements (e.g., Google’s Gemini 3) rather than foundational leaps. Academic and industry skepticism about LLM limitations is growing, suggesting breakthroughs may require new frameworks beyond scaling laws or multimodal approaches. While AI adoption exceeds 60% among S&P 500 firms, applications remain narrow (e.g., coding, customer service), with limited high-complexity use cases. 2. **OpenAI Operational Crisis (60% probability, baseline)** – As the GenAI leader, OpenAI’s aggressive "arms race" tactics could backfire. Google’s AGI advancements and OpenAI’s potential challenges—such as ChatGPT subscriber attrition and weakened fundraising—may disrupt its $2 trillion order pipeline. If OpenAI stumbles, semiconductor/hardware earnings could face downward revisions, while internet/software sectors may benefit. A more measured industry investment pace could follow. 3. **U.S. Inflation Rebound and Bubble Burst (20% probability)** – Historical patterns show excessive CAPEX crowding out resources, fueling structural inflation and liquidity tightening—key bubble-burst triggers. With recovering demand in consumer electronics/data centers and rising semiconductor capacity utilization, AI-driven resource competition and inflation risks are mounting. A 2026 inflation rebound, amid loose fiscal/monetary policies and resilient price data, could mirror 2018’s liquidity crunch, briefly tipping the economy into recession.
**Risk Factors**: Unexpected U.S. inflation rebound; OpenAI operational risks; geopolitical tensions; slower-than-expected AI tech progress; tightening tech regulations; data privacy policy risks; weaker global macro recovery; reduced corporate IT spending; AI ethics/privacy concerns.
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