According to the Zhixun Financial APP, in recent years, driven by the trend of enterprise intelligence, AI technology has shown a rapid development trend, with large-scale artificial intelligence models such as ChatGPT constantly emerging. "AI+" has become a national policy. Today, in the digital wave sweeping the world, artificial intelligence has become a key force for enterprise transformation and upgrading and enhancing competitiveness. Recently, Changjiang Securities released its first coverage report on Fourth Paradigm (06682), stating that the company is positioned as a software company for the AI era, with strong advantages from the customer's perspective and a potential for continuous growth under the new wave of industrial trends driven by large-scale models, giving a "buy" rating for the first time.

As a leader in enterprise-level AI platforms, Fourth Paradigm has established three core business sectors: Fourth Paradigm Sage AI Platform (4ParadiggmSage), SHIFT Intelligent Solution (4ParadigmSHIFT), and Fourth Paradigm Story AIGS Service (4ParadigmAIGS). According to IDC statistics, Fourth Paradigm ranks first in the machine learning development platform market share in China in 2022, with a market share of 32.7%.

Changjiang Securities believes that the market is showing obvious head player scaling effects, with the top five vendors commanding 69.9% of the market share. The company is expected to fully enjoy the growth opportunities of China's enterprise digitization transformation wave. At the same time, in 2024, the company released the new industry large model platform, the Prophet AIOS5.0. Under the large-scale model, downstream customers are thinking about how to further utilize artificial intelligence and other technologies to truly improve efficiency. At the moment, the company has entered a new era of artificial intelligence and is expected to advance continuously and become the software leader in the new era.

At the same time, the number of Fourth Paradigm customers has risen in price, with the company's customers mainly large state-owned enterprises. In 2023, benchmark user revenue accounted for 60.77% of revenue, with benchmark users being the main contributors to revenue. In terms of quantity, the number of benchmark users has increased from 18 in 2018 to 139 in 2023. In terms of price, the average revenue per benchmark user was 3.9/18.38 million yuan in 2018/2023. The rise in benchmark user quantity and price is driving continuous high revenue growth.

In building a long-term moat, Fourth Paradigm places great emphasis on R&D, with long-term high R&D expenses. In 2023, R&D expenses were 1.769 billion yuan, with an R&D expense rate of 42%. At the same time, senior executives and core technical personnel have rich technology and industry experience. For example, Dr. Dai Wenyuan, Chairman of the Board, Executive Director, and CEO of the company, has about 15 years of experience in the field of artificial intelligence, and is one of the leaders in the field of transfer learning. Under Dr. Dai Wenyuan's leadership, Fourth Paradigm has developed into one of China's largest artificial intelligence companies.

Changjiang Securities pointed out that Fourth Paradigm is expected to become the SAP of the AI era nurtured in the soil of China, empowering the platform for enterprise digital transformation. The firm believes that the growth path of SAP has reference value for Fourth Paradigm. It pointed out that Fourth Paradigm's AI Prophet platform has been iterated to version 5.0, indicating that the company's current platform has long-term accumulated competitive advantages, such as starting with large customers, gradually accumulating functional modules, gradually possessing platform effects, and so on.