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UBS: CN Internet Behemoths Ambitiously Magnifying Capex, Investing More in AI
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The China Internet ETF (KWEB) has ascended 37% so far this year, with a 5% increment quarter-to-date, although earnings expectations have been lowered, Fang Jinchong, Head of China Internet Industry Research at UBS Investment Bank, noted, attributing the downward adjustment in earnings expectations to the investment in quick commerce. However, Chinese internet behemoths are ambitiously magnifying capex and investing more in the AI sector. UBS also spotted the sustained development of domestic computing power, including advancements in AI chip layers, system layers, and large model algorithms. Fang stated that geopolitical uncertainties have raised concerns among investors about whether chip supply will influence China's AI development, while believing capex is more demand-driven. Compared to overseas, Chinese internet companies focus more on GPU efficiency and utilization, thus they can adjust investment targets more swiftly and flexibly based on demand changes. Furthermore, LLM/AI is expected to become a sustainable driver of cloud market growth, bringing cross-selling opportunities for traditional businesses and the potential to build long-term ecosystems. Regarding investment in quick commerce, the broker saw signs of short-term competition stabilizing, with industry transaction volume growth slackening, and believed that the industry will bottom out with the conclusion of Double 11. The competition may also de-fuse and gradually return to normal by the end of the fourth quarter. AASTOCKS Financial News Website: www.aastocks.com |
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