According to the Zhitong Finance APP, Guosen Securities released research reports, stating that since 2023, global artificial intelligence has developed rapidly, cloud vendors have vigorously built AI infrastructure, driving a new round of capital expenditure growth. Global cloud vendors have successively made strategic adjustments under the drive of macro policies, and capital expenditure continues to rise. Cloud computing business has achieved rapid development globally, with an increase in return on investment year-on-year. Under the drive of AI technology, the landscape of relevant equipment vendors has changed, with rapid increase in market share for some vendors, initiating a new round of capital expenditure cycle.

Guosen Securities' main points are as follows:

Reviewing Global Cloud Vendors: Policy-driven + strategic adjustments, driving the growth of cloud vendor capital expenditure.

From an international perspective, Amazon was the first to enter the cloud computing field, gradually expanding from IaaS business to PaaS and SaaS businesses, becoming a global leader in cloud computing with a leading advantage in the IaaS field. Microsoft and Google have gradually entered the IaaS field from PaaS and SaaS businesses, with Microsoft seizing the trend of hybrid cloud industry and rapidly increasing market share; after implementing the "catch-up strategy" in 2018, Google's cloud computing business began to grow rapidly. Domestically, Alibaba is the leader in cloud computing in China, benefiting from the rapid growth of mobile internet traffic, leading to the rapid development of cloud computing business.

From the perspective of capital expenditure growth: 1) Policy-driven - Since 2010, the United States has formulated a "cloud-first" development strategy, leading to rapid growth in global cloud vendor capital expenditure; 2) Strategic adjustments - In 2014, Microsoft proposed the "cloud first" strategy, and in 2018, Google proposed the "catch-up strategy", resulting in a significant increase in the company's capital expenditure.

Expenditure Side: Cloud vendor capital expenditure changes observed from the ROIC dimension.

Capital expenditures continue to rise, which will have an impact on depreciation, profits, cash flow, ROIC, and other financial indicators. Based on historical data, an increase in capital expenditures will impact profits approximately 5 quarters afterwards (due to the time difference from server procurement to datacenter completion); depreciation and amortization expenses account for about 25% of operating profit can be seen as a turning point, at which point expenses exert significant pressure on profits; after the turning point, it is expected that capital expenditures will continue to rise for another 2-3 quarters, followed by a year-on-year decline, with FY25Q2 capital expenditures expected to enter a stable period.

On the return side: Calculation of AI cloud leasing return rate for cloud providers.

1) Large cloud providers: Considering only the cost of single-card purchase and single-card electricity cost, the return rates for 24-29 years for single card H100 are 51%, 167%, 257%, 326%, 379%, 419% respectively; if the comprehensive cost of intelligent computing center construction is considered, the expected returns for 24-29 years under neutral expectation are -14%, 52%, 102%, 140%, 168%, 189%;

2) Small cloud providers: Based on statistics from various companies' official websites, the leasing prices of small cloud providers are significantly lower than large factories. Considering only the cost of single card purchase and single card electricity cost, the return rates for 24-29 years are -50%, -4%, 39%, 79%, 115%, 148%.

Review of equipment vendors' performance: Preliminary indicators for cloud provider capital spending.

The performance fluctuations of equipment vendors are directly linked to the capital expenditures of cloud providers. By comparing the revenue growth rates of major equipment vendors such as Cisco, Intel, with the capital expenditure growth rates of cloud providers, it is observed that changes in revenue of equipment vendors lead cloud provider capital spending by about 2 quarters.

Pattern deduction: In the era of the cloud, equipment vendors contend for supremacy, while the AI era welcomes a new king.

AI-driven changes in the landscape of cloud equipment vendors, with the market share of some vendors rapidly increasing, such as Arista, Supermicro; demand for AI chips is growing rapidly, with Nvidia leading competitors in chip performance and ecosystem, holding a dominant position.

Investment advice: Industry trends + company strategies, AI hardware manufacturers are the first to benefit.

Combining the industry dimension (AI cloud is the trend) and the company dimension (each placing AI development at the core), AI drives the current cycle of increased capital expenditure by cloud manufacturers. Based on the relationship between hardware manufacturers and cloud manufacturers' capital expenditures, the performance of hardware manufacturers often leads the investment in cloud manufacturers' capital expenditures. It is recommended to focus on AI cloud computing-related hardware manufacturers, such as Hikun Information (688041.SH), Inspur Information (000977.SZ), etc.

Risk warning: Global cloud manufacturers' capital expenditures fall short of expectations; AI commercialization falls short of expectations, and so on.