The wave of large-scale capital expenditure of leading Internet vendors is spreading from overseas to domestic, and the rapid increase in demand for computing power is expected to bring about a corresponding increase in data center power.
The Zhitong Finance App learned that Guolian Securities released a research report saying that the data center market continues to grow, the capital expenditure of domestic and foreign cloud vendors is still maintaining a high growth rate. Under the rapid development trend of AI, domestic operators are continuously increasing their investment in intelligent computing. The wave of large-scale capital expenditure of leading Internet vendors is spreading from overseas to domestic, and the rapid increase in demand for computing power is expected to bring about a corresponding increase in data center power. We are optimistic about industry segments with logic such as domestic substitution, technology upgrades, and supply shortages, and focus on investment opportunities in IDC manufacturers, liquid cooling systems, liquid cooling pumps, SMR reactors, SOFC, UPS, diesel backup power supplies, data center switch cabinets, and transformers.
Guolian Securities's main views are as follows:
AI boosts data center power
AI-driven data centers continue to upgrade. The data center market continues to grow, and the capital expenditure of domestic and foreign cloud vendors is still growing at a high rate. The scale of China's intelligent computing power is expected to continue to rise and is expected to reach 1,117 EFLOPS by 2027. The evolution of demand for intelligent computing is driving the upgrading of the data center industry chain, putting higher demands on IT hardware and infrastructure. Under the rapid development trend of AI, domestic operators continue to increase investment in intelligent computing. It is predicted that the total power of domestic data centers is expected to rise at an accelerated pace in the next 3 years, and may reach 78.7 GW by 2027.
The properties just needed for liquid cooling technology are revealed
The power consumption of AI processors has been greatly increased compared to traditional processors, and the immediate attributes of liquid cooling technology have been further demonstrated. The maximum power consumption of the Huawei Atlas 800 AI server is 5.6 kW, and the maximum power consumption of the Atlas 900 Pod is 46 kW; the power consumption of the NVL72 server released by Nvidia at the 2024 GTC conference is expected to reach 120 kW. According to IDC data, China's liquid cooling server market will reach 1.55 billion US dollars in 2023, and the market size may reach 7 billion US dollars in 2027; of these, data center liquid cooling pumps will add about 2.8 billion yuan of market space in 2027.
New main power technology has broad prospects
US internet giants have signed cooperation agreements with nuclear power companies. SMR piles are expected to be widely used with advantages such as flexible site selection, short construction cycle, small initial investment, and strong expandability. The SMR market space corresponding to domestic data centers is expected to grow from about 28 billion yuan in 2024 to about 59.1 billion yuan in 2027.
Due to its excellent efficiency, large-scale power generation potential, environmental protection, and continuous power supply characteristics, SOFC technology has become a high-quality choice for data center backup power supplies on the market. With battery advances and cost reductions, the SOFC market space for data centers is expected to increase from about 11.9 billion yuan in 2024 to about 52.3 billion yuan in 2027.
The trend of autonomy of power supply and distribution equipment is obvious
Data center construction has significantly increased demand for high-power UPS, and there is broad scope for independent brand replacement; the domestic data center UPS market space is expected to reach 25.3 billion yuan in 2027, with a 3-year CAGR of 29.0%. The gap between supply and demand for diesel generators with backup power is expected to expand, and the competitive landscape may be reshaped. The market space is expected to reach 41.55 billion yuan in 2027. The 2N power supply architecture has led to a multiplier increase in demand for power equipment. The domestic data center switch cabinet and transformer market space is expected to be 134.5 billion yuan and 6.33 billion yuan respectively in 2027.
Investment advice: focus on the growing demand for IDC construction equipment
It is recommended to focus on IDC manufacturer Runze Technology (300442.SZ), which has benefited from high growth in AIDC construction; the increase in power density drives the enhanced properties of liquid cooling; it is recommended to focus on Invec (002837.SZ), etc.; liquid cooling pump suppliers CICC Environmental (300145.SZ) and Dayuan Pump (603757.SH).
Demand for stable and clean power supplies is increasing. The nuclear power sector focuses on China Nuclear Power (601985.SH), China General Nuclear Power (003816.SZ), and Jiangsu Shentong (002438.SZ), and the SOFC sector focuses on Yishitong (688733.SH), which has a complete layout from powder to electric reactors.
The large-scale UPS trend is raising barriers, and there is plenty of room for independent brands to replace. It is recommended to focus on Kehua Data (002335.SZ), Costa (002518.SZ); BBU suggests focusing on Everweft Lithium Energy (300014.SZ), etc.; the diesel engine sector focuses on leading Weichai Power (000338.SZ). Transformer and switch cabinet suppliers focus on Jinpan Technology (688676.SH), Mingyang Electric (301291.SZ), and Igor (002922.SZ).
Risk warning: Data center construction demand falls short of expectations; technology iteration risk; industry competition intensifies.
