The demand for AI intelligent computing from end customers is strong, and Internet Plus-Related vendors are increasing their procurement of AIDC, Servers, and other computing infrastructure.

The total capital expenditure of BAT in the first three quarters of 2024 amounted to 86.721 billion yuan, a year-on-year increase of 119.80%. The total capital expenditure in Q3 2024 was 36.23 billion yuan, a year-on-year increase of 117.15%, with a quarter-on-quarter growth of 57.93%.

According to Jiemian News, Xiaomi is working on building a GPU ten-thousand-card cluster and investing heavily in AI large models. The Xiaomi large model team had already possessed 6,500 GPU resources at its establishment. According to Xiaomi's 2023 annual speech, the main breakthrough direction of Xiaomi's large model technology is Lightweight and local deployment.

Regarding capital expenditure for servers in 2024, according to Omida data, the Global capital expenditure for servers is approximately 229 billion USD, of which ByteDance's capital expenditure is about 8 billion USD, Tencent's about 6 billion USD, and Alibaba's about 3 billion USD. Internet Plus-Related vendors continue to invest in computing infrastructure construction.

According to third-party forecasts, the total installed capacity of Global Datacenters will increase from 49GW in 2023 to 96GW by 2026, with 40GW of the 47GW increment driven by intelligent computing, accounting for 85%.

Institutions expect that in the next five years, the compound growth rate of computing power scale will remain above 50%.

In the overall cost composition of the Datacenter (excluding Servers and related equipment of the Internet Plus-Related system, including Infrastructure), Electrical Utilities account for nearly 50%, mainly including: high/low voltage distribution systems and automatic transfer devices, diesel Generators, uninterruptible power supplies, cooling systems, rack power supplies, etc. The requirements for related products in the Datacenter are relatively high, which may bring certain increments to some segmented links.

Hong Kong stocks related to computing power equipment:

Weichai Power (02338): The supply barrier for engines is relatively high, currently mainly dominated by foreign companies such as Cummins, Caterpillar, MTU, etc. According to industry feedback, starting from the second half of 2024, engine supply has become relatively tight. Cummins has raised guidance for diesel power-related Business for three consecutive quarters, and the future supply bottleneck may worsen. Companies with engine supply assurance from domestic and foreign sources have an advantage. Domestic engines, such as Weichai and Yuchai, are actively being introduced, and there is significant replacement potential in the future.

ZTE (00763): The new generation of high-performance 400GE/800GE Datacenter Switch supports 14.4T per slot, using Asia Vets lossless technology to achieve zero packet loss and low latency, with green energy-saving features, helping customers create a high-performance, fully functional, and reliable intelligent computing center network; an innovative box-type single-layer multi-track networking solution allows for the flexible and efficient construction of thousands of computing power clusters. This series of products maintains the highest rating of Very Strong by GlobalData among similar products in the domestic market, with the Hardware sub-item receiving the highest rating of Leader. According to the IDC Q3 2023 report, the group’s market share of Datacenter Switches in the domestic market has grown the fastest year-on-year. Datacenters, as the infrastructure for Cloud Computing and Edge Computing, are receiving increasing attention and are gradually becoming an important investment area in the Industry. As a leader in green smart Datacenters, it has released a new generation of Datacenter, focusing on building high-availability Datacenters from four aspects: green energy-saving, fast and easy construction, intelligent management, and safety and reliability, and has launched innovative energy-saving products such as electrical modules and liquid cooling systems, with PUE as low as 1.13 already applied in Jiangsu, Guizhou, and other places. At the same time, it actively responds to the East Data West Computing policy, comprehensively launches a complete solution for eight core node Datacenters, and continues to enhance deployment scale in key nodes such as Gansu, Hohhot, and Ningxia. It is building core competitiveness in self-developed products and actively practicing and creating a model for liquid cooling intelligent computing centers in Binjiang.