After the market continued to shrink and kill, on September 22, the A-share market ushered in a volume rebound. Leading the index rebound is the long-dormant AI sector, with performance in multiple subdivisions such as servers, CPO optical modules, AI large models, and AI applications.
Many AI big tickets, such as Zhongji Xuchuang, Kunlun Wanwei, Inspur Information, Topway Information, iFLYTEK, Industrial Fulian, ZTE, Xinyisheng, and Huagong Technology, achieved a limit increase or a big increase on September 22.
The AI sector resonated with the index on September 22, and a number of big tickets in the sector were launched, or institutional funds were bought back. So why did the AI sector suddenly explode? Can we move beyond continuity? Which companies are worth watching?
The AI sector is also conducive to stimulation
The recent strengthening of the AI sector is inseparable from the positive stimulation of the industry. On September 21, Microsoft held an autumn conference, at which Microsoft announced that it will release the next big update of Windows 11 23H2 on the 26th of this month, according to reports, this system update will have more than 150 new features, including the new artificial intelligence-driven Windows Copilot feature.
Microsoft CEO Satya Nadella also personally demonstrated Copilot's use cases. Nadella said Copilot is an experience that spans multiple interfaces such as the Windows 11 operating system and the Microsoft 365 productivity toolkit, understanding the user's background, providing the right skills when needed and adapting to personalized needs.
In terms of pricing, in line with the news announced in July, Copilot costs $30 per month, an 83% increase from the previous Office 365. Copilot will be available on Windows on September 26, and the Enterprise Edition will be fully available on November 1. Microsoft's "AI office" promotion exceeded market expectations, which means that the commercialization of AI large models has accelerated!
In addition, on September 19, Huawei founder and CEO Ren Zhengfei had the latest minutes of conversations with the ICPC (International Collegiate Programming Competition) Foundation, coaches and gold medalists on August 21 and August 26. Ren Zhengfei said in his speech that we are about to enter the fourth industrial revolution, and the foundation is large computing power.
As an outstanding entrepreneur, Ren Zhengfei has a certain influence on the judgment of industrial trends, so after the news came out on September 20, the direction of AI computing power changed. Previously, a number of world-class entrepreneurs such as Bill Gates have spoken out that AI is the fourth industrial revolution of mankind.
AI sector adjustment in place?
The AI sector is undoubtedly the strongest main line in the first half of 2023, but there has been a strong correction since the end of June. Many stocks in the sector have pulled back more than 40% from their highs, and the correction time has been nearly 3 months. In recent trading days, the AI sector has repeatedly rushed back down, before the index stabilized, so does today's big rebound mean that the sector has bottomed?
Zheshang Securities believes that the adjustment of the AI sector since then is a technical adjustment, and the current round of technical adjustment at the current point, comprehensive amplitude and time has basically come to an end.
First, the time dimension, generally speaking, the rising band and the rest band have time symmetry, such as the ChiNext rising in 2013 and then resting in 2014 and only starting a new round of rise in 2015, and then the ChiNext rising from January to March 2019 and then starting a new round of rise after the rest in April and June. Second, the amplitude dimension, after the first wave of the bull market surge usually has a process of stepping back on the annual line. The three representative indices of this round of AI are computers, media, and communications, regardless of time or amplitude, which are all typical technical adjustments.
There is a clear 5-7 year main line of A-shares under the leadership of the industrial cycle, heavy industry from 2002 to 2007, TMT from 2009 to 2015, large consumption + new energy from 2016 to 2021, and a new cycle led by artificial intelligence in 2023. In 2023, the market will usher in a new round of industrial cycle and general trend cycle, and the nature of the inflection point in 2023 is similar to that of 2009 or 2016.
A number of brokerages have expressed optimism about the AI sector
Guosheng Securities believes that the release progress of Copilot has exceeded expectations, and the expansion speed and value space of AI office have far exceeded expectations. At the same time, domestic AIGC supervision is on the right track, and the value of software applications needs to be released urgently.
On July 13, the Cyberspace Administration of China and other seven departments jointly announced the Interim Measures for the Management of Generative Artificial Intelligence Services. From August 31, Baidu Wenxin Yiyan, iFLYTEK Xinghuo and other large models were officially opened to the public. On September 5, WPS AI was officially opened to the public and was the first to be applied to WPS intelligent documents.
Guosheng Securities is optimistic about the development of AI computing power, and Guosheng Securities believes that the substantive landing of applications is expected to give rise to broader reasoning needs. In the training stage, the input and output information that the multimodal model needs to process will include text, images, video, audio, etc., which is far more complex than pure text data and must be supported by powerful computing power. In the inference stage, model development opens up a vast downstream application space, and user growth will allow application vendors to need more computing power on the model inference side, or increase it by several orders of magnitude compared with the training stage.
TF Securities said that it is optimistic that optical modules are the strongest AI sector: the fundamentals of the optical module sector have been favorable. In 2024, the large-scale deployment of 800G is expected to reach 10 million, and overseas & domestic 400G demand will continue to rise to the same scale of 800G. In 2025, 800G demand will continue and the 1.6T era will begin, the optical module boom will continue for 3 years, and the supply pattern will not change.
As the time and space for optical module adjustment are gradually in place, the valuation is cheap enough, the game factors will be lifted one after another, and the follow-up AI industry trend will land one after another and the cashing of the third quarter results are expected to promote the restart of the sector.
Soochow Securities believes that at the current point, the AI sector should be viewed positively. 1) The relevant targets of the AI sector in the early stage have experienced a deep correction, and the valuation of some targets has become attractive; 2) The industry is still evolving, and the market perception is overly pessimistic. Recently, including the rollout of Microsoft's AI products, it continues to lead the evolution of underlying technologies and applications; 3) Application leaders such as Kunlun Wanwei have continued to fall in the near future and honor the previous logic.
Soochow Securities is optimistic about investment opportunities related to computing power and application. 1) The continuous iteration of the underlying large model is expected to enter a new round of upgrade cycle, which will drive the valuation repair of the computing power sector; 2) Although there is still a generational gap between domestic applications and overseas, with the filing of large models, the continuous upgrading and iteration of applications, and the guidance of overseas experience, domestic applications will continue to grow with the industry trend, and have greater market space and flexibility in the long term.
Ge Weidong, Zhang Mengzhu, Wang Xiaoan and other "Niu San" hold a number of AI concept stocks
According to Choice data, at the end of the second quarter of 2023, Ge Weidong, Zhang Mengzhu, Wang Xiaoan, and Zhao Jianping 10 "Niu San" all held AI concept stocks, with a total market value of more than 16.5 billion yuan. Among them, the Ge Weidong family holds the largest stock market value, with a total market value of nearly 9 billion yuan held by the AI concept. Wang Xiaoan holds the most AI concept stocks, holding 12 AI concept stocks.
In addition, there are many AI concept stocks that are bullish and optimistic. For example, Ge Weidong and the "Zhang Meng Lord" two major families both hold iFLYTEK (Fang Wenyan, the wife of the "Zhang Alliance Lord", holds iFLYTEK). Wang Xiaoan and Fang Shixiong jointly hold 5 AI concept stocks.
A number of AI concept stocks held by Niu Shan rose or rose sharply on September 22. For example, Wang Xiaoan's Kunlun Wanwei achieved a 20% price limit, and Fang Deji, the father-in-law of the "Zhang Alliance Lord", rose by more than 14%.
Among them, Ge Weidong holds 3 AI concept stocks, with a total market value of more than 4.8 billion yuan. Ge Weidong's wife Wang Ping holds 1 AI concept stock, with a stock market value of more than 3.1 billion yuan, and Ge Weidong's family members Ge Guilan and Ge Guilian also hold 1 AI concept stock each, with a total market value of nearly 1 billion yuan.
iFLYTEK is the largest heavy stock of the Ge Weidong family, with a total market value of 4.428 billion yuan. Among them, Ge Weidong held 1.253 billion yuan and Wang Ping held 3.175 billion yuan. iFLYTEK is an AI big model + AI application concept stock, and Ge Weidong first appeared in the top ten circulating shareholders of iFLYTEK in the fourth quarter of 2017, which is a successful case of Ge Weidong's value investment.
Source: Oriental Wealth
Wang Xiaoan and Ge Weidong both started in futures, and at the end of the second quarter, Wang Xiaoan held 12 AI concept stocks, with a total holding of more than 2.5 billion yuan. Among them, many stocks are new entrants in the second quarter. Wang Xiaoan holds many popular AI stocks such as Kunlun Wanwei, Wondershare Technology, and China Science Transmission.
Foreign capital bucked the trend and increased its position in many AI concept stocks
Since the second half of this year, northbound funds have shown an overall outflow of A-shares, which is one of the reasons for the sluggish performance of A-shares since the second half of this year. At the same time, the AI sector has also been mainly adjusted since the second half of the year due to the large increase in the first half of the year.
However, according to Choice data, since the second half of this year, northbound funds have bucked the trend and increased their positions in many AI concept stocks. The author has screened out the 20 AI concept stocks that Northbound funds have bought the most net since the second half of this year for your reference. Among them, 3 AI computing power concept stocks such as Zhongji Xuchuang, Industrial Fortune Alliance and ZTE were increased by more than 2 billion yuan by northbound funds.
What are the AI concept stocks?
The AI industry chain includes upstream AI computing power, data elements, midstream AI large models, and downstream AI applications, involving many companies, and the author has sorted out some AI concept stocks for your reference.
Data description: The content involved in this article does not guarantee the completeness and accuracy of the data, the analysis conclusions are for reference only, and the varieties involved do not constitute actual investment operation recommendations. The stock market is risky, and investment needs to be cautious.
Risk disclosure: The views of the articles involved in this article only represent the author's personal views, do not represent any position of this platform, and do not constitute any investment advice.
Copyright notice: No person or institution may modify it in any form or use it for commercial purposes without permission. If you reprint, quote, translate, create a secondary work (including but not limited to displaying the content of the work in other forms such as audio and video) or use it for any commercial purpose, you must obtain our permission and indicate that the source of the work is private placement, and indicate the source of the content domain name.