INDUSTRIAL SECURITIES: AI and other hot topics inject strong confidence into the market, and the value of China's capital market is being reassessed in 2025

According to the Zhitong Finance APP, INDUSTRIAL SECURITIES has released a research report stating that AI technology is changing the way the macro economy operates, and the transformation has just begun. For China, the most important aspect may not be the short-term profit effect of AI "infrastructure"—the usage rates of AI are cheaper compared to the United States. In the long term, considering the enormous scale effect of the Chinese market, if AI infrastructure can provide affordable and convenient support, it will create more practical scenarios for AI, provide massive training data, and further feed back into technological iteration, leading to greater growth potential in the future. The different characteristics of AI implementation in China and the U.S. also bring about different structural investment opportunities.

The main points from INDUSTRIAL SECURITIES are as follows:

Since the Spring Festival, new technologies such as AI have injected a strong boost into the market, leading to a revaluation of China's capital market.

AI is not only an industry issue but also a macro issue. As a macro research team that heavily utilizes programming and AI, we can deeply feel that new technologies like AI are changing our lives and work. As the first piece in a series of studies, this report conducts a preliminary exploration and reflection on the macro impact of AI:

AI technology is changing the way the macro economy operates, and the transformation has just begun.

The fourth technological revolution centered on artificial intelligence is accelerating into the stage of large-scale application, showing three major characteristics: 1) The speed of technological iteration is multiplying; 2) The diffusion of technology surpasses historical levels; 3) New production factors are rising. According to estimates from relevant academic research, the development of the AI industry is expected to promote an average annual increase of 1 percentage point in GDP and an average annual increase of 0.5 percentage points in productivity. From a macro perspective, the penetration rate of AI-related applications is rapidly increasing but has just begun, with a significant gap compared to the penetration rates of mobile phones and televisions; the combination of AI and robotics in practical applications also requires time, and the innovation has just started.

A competition that cannot be lost, AI "infrastructure" is rapidly advancing in China.

After DeepSeek became popular nationwide during the Spring Festival but faced insufficient computing power and was often "system busy," major internet companies like Alibaba and Tencent quickly announced the deployment of the DeepSeek model within just a few weeks. This rapid diffusion makes one feel that China's "infrastructure mania" seems to have extended into the AI field. In fact, aside from the open-source factor of DS, AI infrastructure shares many similarities with physical infrastructure investments like road construction; both involve short-term construction to better stimulate long-term effects, and both are actively promoted by the government in a top-down manner, indicating that this is a competition that cannot be lost in a national game.

Short-term and long-term interests, the different AI implementation models in China and the U.S.

For China, the most important aspect may not be the short-term profit effect of AI "infrastructure"—the usage rates of AI are cheaper compared to the United States. In the long term, considering the enormous scale effect of the Chinese market, if AI infrastructure can provide affordable and convenient support, it will create more practical scenarios for AI, provide massive training data, and further feed back into technological iteration, leading to greater growth potential in the future. The different characteristics of AI implementation in China and the U.S. also bring about different structural investment opportunities Hot topics like AI inject a strong dose of confidence into the market, and the value of China's capital market is being reassessed for 2025.

Recently, hot topics such as DeepSeek (the increase in opportunities for expanding productivity boundaries, which also brings back the score in the Sino-U.S. AI competition), robotics (leading in areas that combine AI and leverage the advantages of Chinese manufacturing in the face of external demand blockades and internal excess in several high-end manufacturing sectors), and "Nezha" (a correction of the past pessimistic expectations regarding residents' consumption, dining, and travel willingness) have significantly boosted market confidence. Upon further reflection, the bank believes that 2025 may become a turning point for the capital market's narrative on China's macroeconomic situation: whether it is the excess savings on residents' balance sheets or the innovation capabilities of Chinese engineers and supply chains, what is actually lacking is not capability but confidence. Confidence will improve alongside industrial breakthroughs, policy support, the revitalization of private enterprises, and the bottoming out of real estate drag.

Risk Warning: 1) Unexpected changes in the global geopolitical situation; 2) Uncertainty in domestic and foreign economic policies