This week, A-shares entered the Year of the Snake trading time, and the broad market index continued to fluctuate, but the main market force attacked technology stocks under the influence of DeepSeek, and the technology style was obviously more concerned.

Some analysts have pointed out that DeepSeek has triggered changes in the AI industry, the capital market has moved, and the technology camp has repeatedly strengthened and continued to create money-making effects. Behind the market turmoil, investors can continue to pay attention to the two main lines of data centers and semiconductors, which are currently the hottest.

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Data centers: The boom continues

In today's digital economy, data centers are the core elements that promote the development of the digital economy. The increase in the number of users and the resulting increase in user traffic is driving the growth of data volumes, which in turn is driving the need for data centers.

At the same time, some analysts pointed out that with the widespread commercialization of emerging technologies such as 5G, the Internet of Things, and virtual reality, data structures will become more complex, data processing will be more frequent, and unstructured data will increase dramatically, which will put forward new and higher requirements for the scale, storage capacity, computing power and refinement of data centers. In this era and technological background, the data center industry chain is booming. From the perspective of the industrial chain, we are optimistic about AI servers, power supplies, liquid cooling and other subdivisions.

It can be seen that in the past two years, the world has been in the explosive stage of AIGC, and the construction of ultra-large data centers to provide high-capacity and high-performance data storage and processing services has accelerated, driving the steady development of the industry. Driven by the sharp rise in demand for AI servers, the global server industry has expanded rapidly, and the proportion of AI server revenue has also continued to increase. Gao Feng, an analyst at China Galaxy Securities, pointed out that China's AI server industry will also usher in rapid development in 2024, with shipments expected to increase by 18.92% year-on-year to 421,000 units, and the market size will increase by 14.29% year-on-year to 56 billion yuan.

Mo Wenyu, an analyst at Cinda Securities, also said that under the impact of factors such as the global macroeconomic downturn and the sharp reduction in IT demand, the server industry will begin to decline rapidly in 2023. However, after large models occupy the mainstream development direction of AI, the demand for computing power has surged. Although short-term AI servers have further squeezed the space for general-purpose servers, they are still an important development opportunity for the industry chain. After experiencing structural differentiation in 2023, the industry will usher in a comprehensive rebound in 2024, and the economy will rise simultaneously. At present, the server industry is showing a scene of "the demand for traditional general-purpose servers is picking up, and the demand for AI servers is increasing". It is recommended to pay attention to high-quality manufacturers such as Industrial Fortune Union, Shanghai Electric Co., Ltd., Shenghong Technology, and Shennan Circuit.

With the development of AI technology, the power performance of AI servers has improved in many aspects, and the market demand has risen rapidly. Compared with ordinary server power supplies, the AI server power architecture not only increases the power several times, but also further improves the performance in other aspects, including a significant increase in power density, an increase in conversion efficiency, the development of redundant systems, and the emergence of liquid cooling systems. Ma Xiaoming, an analyst at Nomura Orient International Securities, said that he is optimistic that under the logic of rising volume and price, the AI server power supply industry will usher in rapid growth in demand. At the same time, related companies are expected to enjoy the excess profit of products brought by high prosperity dividends. Optimistic about the industrial breakthrough of local enterprises in the future, it is recommended to pay attention to Megmit, Continental Pass, Cooltech Power, etc.

With the continuous improvement of the power of AI chips and the power density of cabinets around the world, liquid cooling has become a must in the future. Wang Zijing, an analyst at Soochow Securities, pointed out that with the increase in overseas GB200 and GB300 shipments, domestic 910C is about to be shipped on a large scale, and cold plate liquid cooling is about to usher in a large volume. At the same time, NVIDIA's next-generation chip Rubin is expected to use immersion liquid cooling, and domestic manufacturers have also begun to test immersion liquid cooling, and the immersion liquid cooling market is about to open. It is recommended to pay attention to Invic, Shenling Environment, and Gaolan shares in the field of cold plate liquid cooling. In the field of immersion liquid cooling, 800 million space-time, Runhe Materials, Juhua Co., Ltd., Capchem, etc.

A selection of potential stocks

Fortune Federation of Industry (601138).

Shanghai Electric Co., Ltd. (002463).

Megmit (002851).

Invic (002837).

Shenling Environment (301018).

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Semiconductors: The follow-up market is optimistic

In the new round of bull market, technology stocks are expected to become the main line of investment, and we continue to be optimistic about the follow-up market of the semiconductor sector.

After nearly five years of development, the revenue and net profit attributable to the parent company of domestic semiconductor equipment listed companies have been growing, but they are still small compared with overseas semiconductor equipment companies and have huge room for growth. In the face of the construction needs of domestic downstream wafer fabs, excellent domestic semiconductor equipment companies must not only continue to meet the personalized needs of customers, but also need more innovative technological development; At the same time, if we can complete more product lines with the help of investment and acquisitions, and provide customers with more complete terminal process application solutions, I believe that we will see excellent local semiconductor equipment companies go through the cycle and continue to grow into "China's AMAT" and "China's KLA".

At present, the global semiconductor capital expenditure is picking up, the downstream demand is increasing, and the overall demand and performance of the semiconductor industry are improving. Yang Zhong, an analyst at Huafu Securities, pointed out that in the process of localization, the autonomy rate of China's semiconductor industry has increased year by year, from 14% in 2012 to 18% in 2022, and is expected to reach 26.6% in 2027. Benefiting from the above-mentioned trends such as the rise of the semiconductor boom, the iterative upgrading of manufacturing technology and the accelerated evolution of the localization rate, domestic semiconductor equipment manufacturers are expected to continue to benefit from the expansion of the semiconductor market scale and the deepening of the localization rate by relying on their own product competitiveness and category expansion capabilities, and the growth rate and space may be very significant. It is recommended to pay attention to North Huachuang, China Micro Corporation, Tuojing Technology, Xinlai Materials, Changhong Technology, Zhengfan Technology, MayAir Technology, and Yingjie Electric, Tengjing Technology, Jingzhida, Jiaocheng Ultrasound, etc.

In the semiconductor industry chain, semiconductor materials are located in the upstream link and are the core foundation of the semiconductor manufacturing process. At present, the localization rate of semiconductor materials in China is low, especially in the high-end field of silicon materials, photoresists and other products. The localization rate of key areas of the semiconductor materials industry still needs to be broken through, and epitaxial mergers and acquisitions are conducive to building platform enterprises to achieve leapfrog development together, and there are many subdivisions of semiconductor materials, and epitaxial mergers and acquisitions to broaden the business scope is also a reasonable path for enterprises to become bigger. In terms of industry cycles, the total capital expenditure of semiconductors in 2024 will be about US$166 billion, a decrease of 2% compared with 2023; Capital spending is expected to grow 11% in 2025 to $185 billion, surpassing the all-time high of $182 billion set in 2022. In the future, the recovery of overall capital expenditure growth will be conducive to the increase in the use of semiconductor materials under the expansion of production capacity, driving the industry to gradually rise.

As the semiconductor industry continues to recover and the demand for semiconductor materials grows, segment leaders are expected to be the first to benefit. Some industry analysts said that benefiting from the recovery of consumer electronics and the high demand for AIGC computing power, the demand for logic has accelerated, the inventory of memory chips has been removed, the price has risen, and the growth rate of the market scale has rebounded. It is expected that in the future, with the continuous recovery of end market demand, the further destocking of inventory, the demand for AI computing power will remain high, the release of new demand such as HBM will be accelerated, and the localization rate of semiconductor materials such as advanced packaging materials, photoresists, and high-end electronic chemicals will continue to advance, and the upward cycle of the industry is expected to begin. In the context of the continuous recovery of market demand and the steady progress of localization, it is recommended to pay attention to Qingyi Optoelectronics in the field of reticle; Dinglong Co., Ltd., Anji Technology, etc. in the field of CMP polishing materials; Huate Gases in the field of specialty gases; Tongcheng New Materials in the field of photoresist, Chinachem Technology, etc.

A selection of potential stocks

North Huachuang (002371).

AMEC (688012).

Changhong Technology (300151).

Anji Technology (688019).

Tongcheng New Materials (603650).