CITIC Securities: The AI industry is in its early stages, and the opportunities brought by AI outweigh the challenges.

At the industry level, new directions and paradigms such as video generation models, world models, and physical AI continue to emerge. Innovations like the integration of video understanding and generation, the fusion of language models and multimodal models, and continual learning for models will keep leading the trends in model innovation. We expect the iteration cycle for models to keep shortening, with model companies represented by Anthropic seeing continuous ARR growth, and gradually rolling out in more high-value enterprise scenarios such as finance, law, and healthcare. On the market side, the biggest current challenges are the relatively high global tech stock valuations and concentrated positions. In addition, the potential IPOs of SpaceX, Anthropic, and OpenAI in the next six to twelve months may impact market liquidity, becoming major events and key observation points for global tech equities. Considering that macro liquidity may marginally tighten in the second half of the year, market performance will rely even more on ongoing realization and verification of earnings. However, as long as the industrial uptrend remains intact, any valuation corrections caused by liquidity shocks will present more opportunities than risks. Meanwhile, the gap between domestic and overseas models continues to narrow, and domestic cloud providers have more room than overseas players to scale up CAPEX investment. As the “domestic models and chips” ecosystem continues to improve, domestic computing power will gain greater flexibility.