Bank of America Securities: Price increases reflect strong AI demand, optimistic about GDS Holdings and Kingsoft Cloud

Bank of America Securities published a research report indicating that several notable developments in China's AI industry were observed this week. ByteDance released Seedance 2.0, a next-generation video generation model with advanced multimodal capabilities. KNOWLEDGE ATLAS (02513.HK) launched its flagship GLM-5, enhancing programming and reasoning performance, and due to strong demand, increased the price of its GLM programming solutions for new users by at least 30%. Additionally, DeepSeek updated its model, extending the context window and providing more timely knowledge. MiniMax M2.5 is open for testing on its overseas agency platform. In the public cloud sector, UCloud (688158.SH) announced price increases for all product and service renewals and new orders.

The firm believes this will have a significant impact on China's data center sector, including the accelerated iteration of domestic AI leading models, which will drive increased demand for data centers due to model training; improvements in programming, reasoning, and multimodal capabilities may accelerate adoption by enterprises and developers, leading to increased demand for inference data centers; and cloud service providers raising public cloud prices may further stabilize IDC leasing pricing trends. In the public cloud sector, strong AI demand may further support cloud service prices and drive the pass-through of rising hardware/memory costs.

Overall, the firm is optimistic about the data center sector's Century Internet (VNET.US) and GDS Holdings (09698.HK), as well as Kingsoft Cloud (03896.HK) in the public cloud sector.

Bank of America Securities' investment ratings and target prices for related stocks are as follows:

Stock | Investment Rating | Target Price

Century Internet (VNET.US) | Buy | $15.1 → $17.9

GDS Holdings (09698.HK) | Buy | HKD 49.1 → HKD 55.6

Kingsoft Cloud (03896.HK) | Buy | HKD 8.8