CITIC Securities: The optimistic narrative of AI in the US stock market is likely to continue in the short term, suggesting adherence to a "watch and see" logic

According to the Zhitong Finance APP, CITIC Securities released a research report stating that under the current favorable macro environment, coupled with strong micro supply chain data and the FOMO mentality of tech giants driven by the importance of AI technology strategies, the narrative around AI CAPEX is likely to continue in the short term. However, the high unpredictability of short-term AI technology and macro expectations also means that optimistic market sentiment could reverse at any time. Therefore, strategically, the firm still recommends following a "watch and see" approach, closely monitoring core variables such as macro expectations, guidance from tech giants, and developments in the AI industry. In the short term, key areas to focus on include: OpenAI products & monetization progress, the release of Gemini 3.0, guidance on software + AI monetization in the US stock market, Q4 earnings reports from tech giants, and the pace of Federal Reserve interest rate cuts.

CITIC Securities' main viewpoints are as follows:

Market Concerns: OpenAI, industry financing structure, AI ROI, etc.

Since September, OpenAI has signed AI computing power procurement contracts totaling over $1 trillion with Oracle, NVIDIA, AMD, Broadcom, and others. AI computing power-related stocks in the US stock market have risen rapidly, but market disagreements and concerns have also begun to increase, mainly reflected in:

1. The authenticity of OpenAI's demand and order fulfillment capability. The significant investment amount raises the question of whether OpenAI has recognized the enormous demand in the AI world or if it is a shrewd business calculation, which is difficult for the market to judge in the short term.

2. Systemic risks brought about by cyclical financing and debt financing. Some companies have begun to shift from relying on conventional financing methods such as free funds and equity sales over the past two years to more aggressive debt financing and supplier financing, embedding various innovative financial arrangements within.

3. The current ROI of the AI industry is still far from ideal. The investment and output in the AI industry remain in a fragile balance, and the balance of AI business (investment and output) needs to rely more on breakthroughs in revenue growth and efficiency improvement; otherwise, the sustained rapid growth of AI CAPEX will be difficult to maintain.

The firm's judgment: Market optimism is likely to continue in the short term, but there is also the possibility of a reversal at any time.

In the short term, the firm believes that the optimistic narrative around AI in the US stock market still has multiple factors supporting it and is likely to prevail:

1. Short-term micro supply chain data shows that AI computing chips & complete machine shipments are smooth, and the prices of storage chips in spot and contract markets are also continuously rising, with representative companies providing optimistic guidance;

2. The "FOMO" mentality of tech giants. The firm estimates that the combined CAPEX of the four major tech giants in North America will exceed 70% of their operating cash flow in 2025, but it remains within a bearable range. Considering the strategic value of AI, tech giants are still fully investing in the short term;

3. A favorable macro environment. The three significant adjustments in AI computing power in the US stock market since 2024 have been due to increasing market concerns about the US macro economy. The current macro combination of loose fiscal policy and interest rate cuts is expected to provide significant support for the AI capital expenditures of tech giants. The ongoing debate between bulls and bears in the market is expected to continue over the next few quarters, likely without forming a clear conclusion. However, given the high unpredictability of short-term AI technology and macro expectations, market sentiment also has the potential to reverse at any time Follow-up Focus: OpenAI, Tech Giants, Macroeconomic Expectations, AI Monetization, etc.

In recent years, compared to the long-term grand narrative of the AI industry, investments in AI computing power have followed a short-term logic of "watching and walking." Therefore, rather than getting entangled in specific conclusions, it may be more beneficial to consider under what triggering factors the current market expectations may experience significant fluctuations or even reversals:

1. OpenAI: The market is expected to continuously adjust its judgment on OpenAI's ability to fulfill its massive orders based on observations of its algorithmic leadership, monetization progress, and effectiveness. In the short term, the focus will be on Google's upcoming release of the Gemini 3.0 model;

2. AI Monetization: Following the internet, the commercialization breakthroughs of startups and software SaaS are key for the continued advancement of the AI industry, especially in software SaaS. The revenue from US software + AI is expected to reflect this, with Q3/Q4 being a possible time point, and October's Q3 financial reports may serve as the best observation window;

3. Guidance from Tech Giants: US tech giants are expected to release their Q4 2025 financial reports between late January and early February 2026. At that time, Wall Street is likely to reassess the balance between global AI CAEPX scale, sustainability, corporate-level AI investments, and shareholder returns based on core guidance data;

4. Macroeconomic Expectations: The combination of expansive fiscal policy and interest rate cuts is driving a surge in market animal spirits and supporting optimistic expectations for AI computing power. The subsequent pace of interest rate cuts by the Federal Reserve will be one of the important variables for observation.

Risk Warning: Risks of fluctuating expectations for Federal Reserve interest rate cuts; risks of escalating geopolitical conflicts; risks of AI core technology development falling short of expectations; risks of continued tightening of policy regulation in the tech sector; risks of global macroeconomic recovery falling short of expectations; risks of macroeconomic fluctuations leading to lower-than-expected IT spending by European and American companies; potential ethical, moral, and user privacy infringement risks associated with AI, etc