CICC: AI restructuring capital expenditure, domestic cloud-side hardware boom is rising

The Zhitong Finance App learned that CICC released a research report saying that in the past six months, leading technology companies represented by major domestic Internet companies have unleashed a stronger will and confidence in AI models and commercial innovation based on big models. DeepSeek has further triggered a profound restructuring of the global perception of “Chinese AI” capabilities. Supported by this opportunity, leading domestic CSP vendors have set off a wave of investment. The bank expects its capital expenditure to enter a new upward cycle driven by AI. Judging from the data center investment structure, the bank judges that mainstream domestic suppliers in the fields of servers, switches, optical modules, etc. are expected to benefit from this upward wave of capital expenditure.

CICC's main views are as follows:

Leading domestic CSP accelerates ecological collaboration on AI applications, and capital expenditure enters a new upward cycle

The large-scale investment cycle for overseas AI began earlier. The capital expenditure of the four leading CSP manufacturers in North America increased 63% year-on-year in 24, and is expected to increase further 32% in '25 according to Bloomberg's agreed expectations. From Stargate to Apple, the number of key participants in overseas AI investment continues to increase, driving continued growth in AI hardware demand.

Domestic AI investment is ushering in key nodes

Leading domestic technology companies, represented by Internet vendors, are actively exploring AI models and applications. AI models such as Model-Side Doubao, DeepSeek-R1, and Tongyi Qianwen continue to explore technological boundaries, and application-side “big model equality” boosts the AI application empowerment industry. The bank believes that the domestic AI commercialization process is expected to accelerate. The rise in the demand-side boom has driven an increase in investment in the AI data center sector, and the intention of domestic CSPs to increase investment in data centers has gradually been clearly established. At the 3QFY25 public results conference, Ali stated that the investment in cloud computing & AI infrastructure in the next three years is expected to exceed the sum of the past ten years, which means that the annualized investment in 2025-2027 is expected to exceed 100 billion yuan. The bank anticipates that domestic AI investment expansion has just begun, and the scale of investment is expected to greatly exceed the peak of the previous round of capital expenditure boom cycle driven by traditional cloud computing.

Which cloud hardware companies are expected to benefit

The bank estimates that in 2025, the total investment in data centers driven by CSPs in China is expected to reach nearly 400 billion yuan, with a year-on-year growth rate of 79%; when combined with telecom operators' computing network investment, the total investment amount of leading CSPs and operators' data centers is expected to reach nearly 500 billion yuan, and is expected to further exceed 600 billion yuan by 2027. As a core component of data center IT hardware, the bank expects that in 2025, the domestic CSP & Telecom digital communication server market space is expected to reach 263.2 billion yuan; the market space for Ethernet switches and optical modules is 18.9 billion yuan and 22.7 billion yuan respectively.

risk

The implementation of domestic CSP capital expenditure fell short of expectations, and the implementation of AI applications fell short of expectations.