AI Spearheads Innovation, Capturing Global Opportunities: H2 2024 Investment Strategy

Time: 2024-06-11 11:40

AI Spearheads Innovation, Capturing Global Opportunities: H2 2024 Investment Strategy

For the second half of 2024, we believe the main investment focus in the tech sector will remain on innovations across the AI industry chain, while also capitalizing on niche opportunities like globalization. Regarding AI, accelerated large model iterations, application deployments are expected to sustain investment momentum. We recommend concentrating on the computing power value chain - optical modules, servers, cloud infrastructure, and domestic substitutes like AI chips and semiconductor equipment. With "AI+" enablement, industry applications, consumer electronics, autonomous driving, and robotics are poised for quicker product/application commercialization.

2024 Themes: AI Value Chain Innovation, Global Opportunities

H2 2024 will continue centering on the AI theme, with key areas being computing power, AI application deployment, and intelligent device iterations.

1) AI Value Chain: China's 2024 policy roadmap stresses leveraging AI to empower industries and foster globally competitive digital clusters. As a new productivity engine, AI's development gets policy tailwinds. With external conditions rebalancing, we see domestic computing power and semiconductor self-sufficiency gaining prominence. Application-wise, multimodal upgrades, edge AI deployments, and reduced API costs drive rapid AI solution evolution across verticals and smart device upgrades.

2) Global Expansion: We advise tracking structural openings from tech innovation and globalization, including internet, consumer electronics, autos/NEVs.

AI Value Chain: Large Model Leaps, Computing Strength, Accelerating Deployments, Smarter Devices

For H2 2024, we anticipate tech fundamentals continuing to improve, with AI remaining the core investment thesis. Cutting-edge global models like LLaMa 3, GPT4-o spur local rivals. Multimodal advances and edge deployment prowess will hasten application roll-outs. Our recommendations:

1) Computing Power and Domestic Substitutes: Optical modules, AI servers, AIDC kit etc. will sustain high momentum, while AI chip design, semiconductor manufacturing self-reliance grows amid the rebalancing externalities.

2) AI Applications: With domestic large model upgrades and multimodal progress, we favor enterprise productivity, education, internet - avenues where "large model-application-commercialization" loops form via subscriptions.

3) Intelligent Devices: Domestic large model edge adaptation, interaction innovations unlock consumer electronics, autonomous vehicles, robotics opportunities.

Globalization and Recovery: Internet, Consumer Tech, Autos/NEVs, Telcos Warrant Attention

For H2 2024, we suggest tracking openings from tech exports, industrial innovation and valuation recovery. Globally, cross-border e-commerce drives new internet/service growth paths; mobile devices, home entertainment, wearables present select consumer tech chances; brand automakers' organic/inorganic strategies expand their international footprints amid robust advantages in vehicles, batteries etc. Additionally, the internet and telco segments offer attractive prospects: the internet's profit/cash reserves and shareholder returns make its valuations compelling versus global peers amid foreign inflow-led recovery. Telcos' resilient earnings growth, cost controls and enhanced dividends render their yield appealing.

Risk Factors

Sluggish economic growth impacting corporate/government tech spend; escalating trade tensions; unfavorable policies; tighter global liquidity; margin pressures from new ventures; slower core tech/product progress; intensifying competition in hot sub-segments.

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