CITIC Securities has released a research report indicating that in the first half of 2025, the computer industry experienced notable revenue acceleration and significant net profit improvement. The computing power sector achieved high revenue growth driven by factors including accelerated CAPEX, technological upgrades, and supply improvements. Information technology innovation maintained robust growth momentum and is expected to continue accelerating in the second half, with product categories potentially expanding to industrial software and other areas. AI applications showed substantially increased AI contribution ratios, while profitability improved markedly through cost reduction and efficiency enhancement initiatives. The firm anticipates that an earnings inflection point is approaching.

Looking ahead to the second half of 2025, CITIC Securities believes AI's growth contribution to the computer sector will further increase. Combined with fundamental improvements and profit growth driven by cost reduction and efficiency gains, the firm is optimistic about new investment opportunities. Key recommendations include: 1) AI infrastructure; 2) AI applications; 3) comprehensive information technology innovation.

**Key Investment Themes:**

**Sector Performance Shows Clear Revenue Acceleration and Significant Net Profit Improvement in H1 2025**

Using the Computer (CITIC) Index as a sample: In H1 2025, the computer sector's total revenue reached 937.2 billion yuan, up 19.4% year-over-year, with growth acceleration of 15.1 percentage points compared to the previous year, representing a 3.7 percentage point improvement. Net profit totaled 18.7 billion yuan, up 34.8% year-over-year, marking a positive turnaround from the -23.3% decline in H1 2024, demonstrating substantial profit recovery.

In Q2 2025, the computer sector recorded total revenue of 511.0 billion yuan, up 17.9% year-over-year, with net profit of 14.0 billion yuan, up 28.8% year-over-year. Overall revenue and net profit growth rates remained broadly consistent with H1 2025 trends, indicating the computer sector has already shown revenue acceleration trends in the first half, with net profits beginning significant improvement.

**Computing Power Sector Achieves High Revenue Growth**

Representative companies demonstrated strong revenue growth, driven by several core factors: 1) Internet giants' CAPEX continues exceeding expectations; 2) New models and computing power lead industry trends, with next-generation models featuring larger scale, innovative architectures like Mamba, and inference solutions addressing high concurrency and low latency challenges, creating new requirements for computing infrastructure. System-level computing hardware built through network expansion and inter-chip connectivity has become an important trend, exemplified by NVIDIA's NVL72 and Huawei's CloudMatrix384 super computing nodes. Model developments continue with DeepSeek, Kimi K2, and Grok 4, while DeepSeek-V3.1's new UE8M0 FP8 parameter precision significantly enhances training and inference efficiency, supporting domestic computing power competitiveness; 3) Leading AI server manufacturers have successfully ramped production capacity, while domestic chip supply and yield rates continue optimizing.

Based on these factors, CITIC Securities expects domestic AI to lead accelerated performance delivery starting in the second half, driving a new wave of AI computing power market activity.

**Information Technology Innovation Maintains Strong Momentum**

As predicted in previous research, 2025 represents a year of accelerated information technology innovation procurement implementation, with related companies maintaining high revenue growth in the first half. Contributing factors include ongoing uncertainties in the global trade environment and clear policy support for technological innovation with expected increased funding support. Simultaneously, domestic databases, operating systems, CPU/GPU and other core information technology innovation categories are rapidly iterating and innovating, supporting demand-side release.

In industrial software, revenue growth differentiation among representative companies reflects varying downstream industry demand impacts. Manufacturers increasingly focus on product refinement and merger opportunities, with multiple acquisition cases initiated or completed. CITIC Securities expects CAD/EDA/CAE-represented industrial software to further accelerate growth throughout the year, potentially expanding acquisition activities and creating additional investment opportunities.

**Application Sector Shows Growth Differentiation with Significantly Increased AI Contribution**

Faster revenue growth areas in H1 2025 included AI solutions and financial platform software, primarily influenced by AI major client project demand and capital market trading activity. AI application product companies also maintained steady growth rates, with CITIC Securities expecting them to potentially succeed AI solution companies as important future AI application growth drivers starting in the second half.

Vertical industries such as financial IT, consumer IT, real estate and construction IT, and medical IT, which exhibit higher pro-cyclical characteristics, continue facing revenue pressure. Notably, AI contribution ratios have significantly increased across application sectors. CITIC Securities expects 2025 to mark the beginning of AI application volume expansion, with individual companies' AI contribution ratios gradually reaching double-digit levels by 2026, creating significant positive impact on company revenues.

On the profitability front, application companies across sectors have demonstrated varying degrees of loss reduction, turnaround to profitability, or substantial profit growth, reflecting cost reductions through efficiency improvements and productivity gains from AI coding technologies. CITIC Securities believes AI application companies are gradually reaching earnings inflection points, expecting rapid profitability improvement as AI generates additional incremental benefits, creating new investment opportunities.

**Risk Factors:** AI large model progress and commercial implementation below expectations; major company CAPEX and computing power demand below expectations; information technology innovation advancement slower than expected; corporate IT investment below expectations.