AI Computing Power Industry Analysis and Opportunities: High AI Computing Demand May Initiate a New Growth Cycle
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The AI computing power industry, as a vital infrastructure supporting the development of artificial intelligence technologies and applications, has experienced rapid growth and transformation in recent years. AI computing power plays an irreplaceable role in large model training and application deployment. With the advancement of the AI industry, companies related to computing power may also be among the first in the AI sector to realize performance gains and sustain long-term benefits.
Data shows that training generative AI models is an extremely computation-intensive process. These models contain millions or even billions of parameters and require multiple rounds of iterative training on vast datasets. The training process involves a large number of computation-intensive operations such as matrix calculations and gradient computations. Therefore, powerful computing resources are essential to accelerate the training process.
AI Computing Power Industry Analysis and Opportunities
In recent years, China's computing power scale has steadily expanded, contributing significantly to GDP growth. From 2016 to 2022, the country's computing power scale grew by an average of 46% annually, while the digital economy grew by 14.2% and GDP by 8.4%. According to IDC data, China's intelligent computing power scale is expected to reach 414.1 EFLOPS in 2023, with a compound annual growth rate of 33.9% from 2022 to 2027. Currently, the government places high importance on computing power infrastructure, with AI demand and policy drivers continuously expanding the intelligent computing power market. Domestic computing power is gradually accelerating, and intelligent computing centers are key to the development of computing power.
With the widespread application and deepening development of artificial intelligence technologies, the market size of the AI computing power industry continues to expand. More enterprises and institutions are investing in the construction and application of AI computing power, driving rapid growth in the AI computing power market. It is expected that the AI computing power market will maintain high-speed growth in the coming years. Technological development and innovation in the AI computing power industry are key drivers of market growth. With continuous breakthroughs and innovations in chip technology, computing architectures, and algorithm optimization, AI computing power continues to improve, providing stronger support for artificial intelligence applications. In the future, as technology progresses and innovates further, the AI computing power industry will encounter more development opportunities and challenges.
The application areas of the AI computing power industry are expanding, covering autonomous driving, smart manufacturing, intelligent finance, smart healthcare, and more. As AI technology continues to develop and become more widespread, AI computing power will be applied and promoted in even more fields, offering robust support for the digital transformation and intelligent upgrading of various industries.
The AI computing power industry, as a critical infrastructure supporting the development of AI technologies and applications, is undergoing rapid growth and transformation. The expansion of market size, technological innovation, and the broadening of application areas have created vast development opportunities for the industry.
Currently, the three major telecom operators have increased investments in computing networks, deploying AI infrastructure such as intelligent computing centers. China Securities (CSC) believes that state-owned enterprises have advantages in financial strength, application scenarios, and industrial chain support, which could drive the development of the domestic AI computing power industry. Key areas to watch include chips, servers, switches, data centers, and liquid cooling solutions.
The high demand for AI computing power may usher in a new growth cycle.
Since the release of Sora, global attention to artificial intelligence has surged, fueling a continuous rise in the popularity of computing power-related concepts in the A-share market. Industry experts generally believe that the Sora hype could extend to upstream computing power infrastructure, potentially triggering another surge in demand for computing power. In the secondary market, many funds have begun deploying capital, with ETFs being one of the primary channels. Data shows that during yesterday's market correction, the Cloud Computing ETF (159890) attracted 33.15 million yuan in inflows, with net subscriptions nearing 40 million yuan over the past five days.
Zhongji Innolight stated that the surge in AI computing demand and related capital expenditures since 2023 has significantly boosted the need for high-speed optical modules like 800G, accelerating technological iterations. During the reporting period, the company benefited from increased shipments of high-end products like 800G and continuous design optimizations, leading to steady improvements in revenue, gross margin, and net profit margin.
Looking ahead, advancements in the AI industry will continue to expand demand for underlying hardware such as optical modules, driving iterations toward higher performance and lower power consumption. These trends are expected to bring long-term positive changes to the sector. Additionally, as computing power constraints intensify, domestic AI chips are likely to gain competitiveness and market share, with institutions broadly optimistic about opportunities in China's computing power supply chain in 2024.
Opportunities in Intelligent Computing Development
Nvidia recently announced Q4 FY2024 revenue of $22.1 billion, up 265% year-over-year and 22% quarter-over-quarter, surpassing market expectations of $20.41 billion and setting a historical record. This reflects the strong demand for AI computing power. As the foundational pillar of the AI era, computing power is poised to attract renewed market attention, with related suppliers expected to see earnings growth. Key investment opportunities include AI server components, complete server systems, computing power leasing, and data centers. The development of the artificial intelligence industry has gained attention at the national level, with frequent favorable policies. From the 'East Data West Computing' initiative to the 'National Integrated Computing Power Network' and the 'Central Enterprises Artificial Intelligence Promotion Conference,' these measures highlight the government's determination to support the sector. The recent push by the State-owned Assets Supervision and Administration Commission for central enterprises to develop AI has once again driven the industry forward, benefiting the AI sector as national and local governments continue to release standards and supportive policies.
Galaxy Securities believes that Sora is still in its early stages, with issues such as accurately simulating physical motion laws and scenes, confusing left and right directions, and mixing up spatial details. However, as Sora continues to iterate and optimize, and the scale of training datasets increases, future computing power demands will experience exponential growth, sustaining optimism about investment opportunities in upstream computing infrastructure.
From a national perspective, computing power has become an important measure of a country's strength. Countries worldwide are formulating their own AI strategies and policies to promote the development of the AI industry.