Yongxing Securities 2026 Communications Strategy: Optical Interconnection + End-side AI Dual Wheel Drive

Recently, Yongxing Securities announced its 2026 strategy for the communications industry, believing that optical interconnection technology continues to develop and end-side AI scenarios are becoming more and more abundant.

On the news side, global computing power demand and technology iteration are beneficial to the industrial chain. The capital expenditure of overseas cloud vendors is rising rapidly, and the scale of China's intelligent computing power is growing rapidly. The evolution and development of optical interconnection technology is driving the growth of demand in the industrial chain. Demand for high-speed optical modules such as 800G and 1.6T is expected to grow rapidly in the future; scale-up penetration rate increases demand for digital optical modules; silicon light solutions are one of the important future development directions for optical modules; all-optical switching OCS technology enables flexible topology and system flexibility, and Google technology has deep advantages; as chip power consumption increases rapidly, air-cooled heat dissipation approaches the limit, liquid cooling penetration rate is expected to increase rapidly. End-side AI applications drive the development of the IoT industry. The IoT market is growing steadily, and end-side AI has become a new driving force. AI toys are rich in personalized experiences, and many products are on the market; the penetration rate of intelligent mowers is still low, and the market growth potential is great; embodying intelligence has become a national strategy, and the market size continues to expand. The satellite internet policy continues, and networking continues to advance. The satellite Internet industry chain is comprehensive, and domestic policies are being implemented intensively. Domestic satellite internet has entered the stage of industrial development, and constellation networking plans continue to be deployed.

According to Frost & Sullivan's report, in 2024, global AI infrastructure investment will increase from RMB 100 billion in 2020 to RMB 598.5 billion, with a compound annual growth rate of 56.4%; it is expected that by 2029, the investment amount will further increase to RMB 3135 billion, with a CAGR of 39.3% from 2024 to 2029. Among them, China's AI infrastructure investment increased from RMB 36.8 billion in 2020 to RMB 169.6 billion in 2025, with a compound annual growth rate of 46.5%; it is expected that by 2029, the investment amount will further increase to RMB 102.7 billion, with a compound annual growth rate of 42.7% from 2024 to 2029. According to Frost & Sullivan's analysis, this growth trend is expected to continue due to the structural shift in computational demand to inference and the continuous expansion of cloud-based AI services.

In terms of investment recommendations, the communications industry will maintain its “gain” rating for the next 12 months.

Yongxing Securities pointed out in the research report that there are the following four main types of investment:

Main investment line 1: The operator's performance continues to be steady, and the dividend rate is steadily increasing. It is recommended to focus on China Mobile, China Telecom, and China Unicom.

Main investment line 2: The Internet of Things continues to develop, and end-side AI potential can be expected. I recommend Xiaomi Group, Lenovo Group, ZTE, Suteng Juchuang, and Cross-border

Main investment line 3: Demand for AI computing power is strong, and the communications industry chain continues to benefit. It is recommended to focus on Zhongji Xuchuang, Xinyisheng, Tianfu Communications, and Ruisheng Intelligence.

Main investment line 4: The satellite networking process is accelerated, and Huazu Navigation is recommended