To The Moon

DeepSeek Drives Growth in Cloud Services and Data Centers

Recent Developments:

• DeepSeek's Global Expansion: Major Chinese cloud platforms, including $Baidu(BIDU)$ Cloud, Huawei Cloud, $Alibaba(BABA)$ Cloud, and $Tencent Holding Ltd.(TCEHY)$ Cloud, have recently integrated DeepSeek's large language model. This move not only marks a significant leap in AI technology but also signals a broader future for enterprise-level intelligent applications.

• Global Cloud Giants' Investment Plans: Overseas cloud service giants such as $Microsoft(MSFT)$ , $Alphabet(GOOG)$ , $Amazon.com(AMZN)$ AWS, and $Meta Platforms, Inc.(META)$ plan to significantly increase their capital expenditures in 2025, with an expected year-over-year growth of 31% to $259.4 billion. These companies are accelerating the integration of AI and cloud computing, driving the construction of data centers and AI infrastructure.

ETFs Related to Cloud Services and Data Centers:

1. $Global X Data Center & Digital Infrastructure ETF(DTCR)$

   • Focus: The only ETF currently dedicated to the data center industry, suitable for investors looking to directly invest in data centers. It includes holdings in data center operators (e.g., Equinix and Digital Realty) and semiconductor companies (e.g., NVIDIA and Broadcom).

2. $WisdomTree Cloud Computing Fund(WCLD)$

   • Focus: Provides broad exposure to the cloud computing sector, suitable for investors bullish on the long-term growth of cloud technology.

3. $Global X Cloud Computing ETF(CLOU)$ and $First Trust Cloud Computing ETF(SKYY)$

   • Focus: Both ETFs focus on cloud computing, but CLOU leans more towards large tech companies, while SKYY emphasizes cloud service providers.

4. $ISHARES U.S. DIGITAL INFRASTRUCTURE AND REAL ESTATE ETF(IDGT)$

   • Focus: Offers a dual investment opportunity in data centers and wireless infrastructure, with additional holdings in networking companies (e.g., Cisco and Fastly). Suitable for investors seeking diversification.

Industry Outlook and Key Companies:

Market Growth:

• According to Gartner, global IT spending is expected to reach $5.26 trillion in 2024, up 7.5% from 2023. The data center systems market is projected to grow by 24.1%, a significant increase from the 4% growth in 2023.

• Global end-user spending on public cloud services is expected to reach $723.4 billion in 2025, up 21.5% from 2024.

AI Integration:

• Generative AI and large models are driving a new wave of growth in the data center and server industries. Global server sales reached $151.56 billion in the first three quarters of 2024, up 65.0% year-over-year.

• AI inference applications are expected to accelerate in 2025, with a projected 24% increase in enterprise investment in AI computing power.

Multi-Cloud and Hybrid Cloud Trends:

• Over 50% of enterprise workloads will run in the cloud, with multi-cloud deployments (combining public, private, and edge clouds) becoming mainstream.

• By 2025, multi-cloud and hybrid cloud architectures are expected to be the preferred IT model for most enterprises.

Edge Computing:

• Edge computing, which deploys distributed nodes closer to end-users, extends cloud computing capabilities to the edge, reducing network latency.

• The edge cloud service market is growing rapidly, with a projected compound annual growth rate of 30.1% from 2022 to 2027.

Security and Compliance:

• As data breaches and privacy concerns become more prominent, the cloud service industry is increasingly focusing on security and compliance.

Key Companies:

• Global Cloud Service Providers:

  • $Amazon.com(AMZN)$ AWS: One of the largest cloud service providers, continuously investing in AI and data center infrastructure.

  • $Microsoft(MSFT)$ Azure: Strong in cloud computing and AI, planning to invest $85 billion in AI and cloud in 2025.

  • $Alphabet(GOOG)$ Cloud: Focused on AI and machine learning, planning to invest $75 billion in data centers and AI.

  • $Meta Platforms, Inc.(META)$ : Planning to invest $65 billion in AI and data center infrastructure.

• Data Center Operators:

  • $Equinix(EQIX)$ : One of the largest global data center operators, specializing in high-performance data centers.

  • $Digital Realty Trust Inc(DLR)$ : Provides large-scale data center solutions supporting AI and cloud computing.

  • $GDS Holdings Ltd(GDS)$: Leading third-party data center operator in China.

• AI Hardware and Technology Providers:

  • $NVIDIA(NVDA)$ : Global leader in GPUs and AI hardware, supporting AI training and inference.

  • $Broadcom(AVGO)$ : Focuses on data center networking and AI hardware.

• Chinese Cloud Service Providers:

  • $Alibaba(BABA)$ : China's largest cloud service provider, driving the integration of AI and cloud computing.

  • $Tencent Holding Ltd.(TCEHY)$ : Strong in cloud computing and AI.

  • Huawei Cloud: Offers comprehensive cloud services and AI solutions.

Institutional Expectations:

• Market Growth Projections:

  • Gartner forecasts global public cloud service spending to reach $723.4 billion in 2025, with a growth rate of 21.5%.

  • The global server market is projected to grow at a compound annual growth rate of 20% from 2024 to 2028.

• Technology Trends:

  • The integration of AI and cloud computing will be a core driver for enterprise digital transformation.

  • Data center capital expenditures will continue to grow, with hyperscale cloud service providers investing approximately $320 billion in AI in 2025.

Disclaimer: The content is based on publicly available market information, and historical data should not be used as the basis for future investment decisions.

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