China Galaxy Securities: The artificial intelligence sector is still in a prosperous cycle, and domestic computing power is ushering in a new era

According to the Zhitong Finance APP, China Galaxy Securities released a research report stating that the artificial intelligence sector index continued to rise in August. The artificial intelligence sector is still in a prosperity cycle, and the focus will be on domestic computing power chips and infrastructure, as well as the acceleration of commercialization of AI applications and Agents in various scenarios. DeepSeek has validated the effectiveness of its training using FP8 parameter precision since the V3 version. In the future, domestic large models will increasingly embrace FP8 computing power precision and are expected to become a new technological trend. By leveraging the synergy of software and hardware, a significant performance improvement can be achieved, leading to a transformation in domestic computing power chips.

The main points from China Galaxy Securities are as follows:

The sector continued its upward trend in August.

The artificial intelligence sector index (884201.WI) had a fluctuation of 14.42% in August, while the Shanghai Composite Index fluctuated by 7.97%, the CSI 300 by 10.33%, and the ChiNext Index by 24.12%. The trading volume of the artificial intelligence sector in August was CNY 25,333.9 billion, a year-on-year increase of 644.23% and a month-on-month increase of 85.5%, continuing the upward trend from July and slightly accelerating. The bank believes that overall market liquidity remained loose in August, with the PMI index slightly rising by 0.1 percentage points to 49.4%, indicating a marginal improvement in manufacturing prosperity, which has somewhat boosted market confidence. The market expects the Federal Reserve to enter a rate-cutting cycle in September, while the inclusion of A-shares in the MSCI index will increase weight, attracting passive foreign capital allocation. Various factors resonate, and individual stocks within the sector have also seen good gains. The artificial intelligence sector is still in a prosperity cycle, with a focus on domestic computing power chips and infrastructure, as well as the acceleration of commercialization of AI applications and Agents in various scenarios.

DeepSeek-V3.1 uses UE8M0 FP8 Scale parameter precision, bringing new opportunities for domestic computing power.

On August 21, DeepSeek officially released the next-generation large language model DeepSeek-V3.1, which introduces a hybrid inference architecture and significantly enhanced Agent capabilities, allowing the model to support both "thinking" and "non-thinking" modes within a unified architecture, and uses UE8M0 FP8 Scale parameter precision for the upcoming next-generation domestic computing power chips. DeepSeek has been using FP8 parameter precision since the V3 version to validate the effectiveness of its training. By reducing computing power precision, domestic ASIC chips can achieve computing power precision close to that of advanced process NVIDIA GPUs on mature processes (12-28nm). DeepSeek-V3.1 uses UE8M0 FP8 Scale parameter precision, allowing software to actively embrace data formats preferred by hardware. The "software-hardware synergy" ecological technology barrier is gradually becoming a new paradigm under the AI wave. In the future, domestic large models will increasingly embrace FP8 computing power precision and are expected to become a new technological trend. By leveraging the synergy of software and hardware, a significant performance improvement can be achieved, leading to a transformation in domestic computing power chips.

OpenAI has made a significant release of GPT-5, accelerating the AGI process. On August 8th, Beijing time, OpenAI held a press conference to officially launch GPT-5. GPT-5 is OpenAI's first "integrated" AI system, which combines the GPT large language series models with the o series reasoning models, possessing the ability to schedule sub-models, capable of recognizing when to respond quickly and when to take longer to think, without requiring user selection. In addition, GPT-5 has achieved significant improvements in programming capabilities, creative writing, and the health sector. The powerful performance and scheduling capabilities of GPT-5 are closer to an autonomous AI Agent, capable of independently completing responsible tasks, accelerating the landing of AI Agent scenarios, and promoting the acceleration of AGI progress.

Investment Suggestions

Focus on the following sub-sectors and companies: 1. Domestic computing power industry chain; 2. IDC service providers and computing power leasing; 3. Domestic Xinchuang manufacturers; 4. AI Agents and applications; 5. Cloud computing manufacturers; 6. All-in-one machines and edge-side AI; 7. Supply, circulation, and application companies in the data element industry chain.

Risk Warning

Risks of technology iteration not meeting expectations; risks of intensified competition among tech giants; legal and regulatory risks; supply chain risks; risks of downstream demand not meeting expectations