China Galaxy Securities released a research report stating that the flourishing development of generative AI has entered the "AI era," with AI set to penetrate all industries and generate profound impact. The development of the mechanical equipment industry possesses characteristics of its era, therefore major investment opportunities in the mechanical equipment industry during the "AI era" will revolve around AI. The firm recommends focusing on two major directions - AI infrastructure and AI enablement - as key allocations for the 15th Five-Year Plan period. For AI infrastructure direction, it recommends AI PCB equipment (including PCB equipment, consumables, and SMT equipment), AI data center power generation equipment (including diesel generators, gas turbines, and nuclear power equipment), liquid cooling, and semiconductor equipment. For AI enablement direction, it recommends embodied robots and their application scenario implementation.
China Galaxy Securities' main viewpoints are as follows:
Reviewing Five-Year Plans to Guide 15th Five-Year Plan and Sort Out Mechanical AI Investment Opportunities
Reviewing the past four "Five-Year Plans," investment opportunities in mechanical equipment all possessed characteristics of their respective eras, such as construction machinery driven by infrastructure and real estate during the 11th Five-Year Plan period, industrial robots under the major development of intelligent manufacturing during the 12th Five-Year Plan period, new energy equipment during the 13th Five-Year Plan period, and humanoid robots during the 14th Five-Year Plan period. Looking ahead to the 15th Five-Year Plan, the "AI era" will also catalyze investment opportunities in the mechanical equipment industry around AI, which the firm categorizes into two major types: AI infrastructure and AI enablement.
AI Infrastructure: Optimistic about PCB equipment, AI data center equipment, liquid cooling equipment, semiconductor equipment and other directions:
(1) The AI computing power revolution drives PCB demand growth. AI servers bring not only quantitative growth but also significant enhancement in PCB unit value. PCB equipment and materials are expected to fully benefit.
(2) AI data center equipment: Artificial intelligence data center power drives upward demand for gas turbines, nuclear power, and diesel generators.
(3) AI computing power accelerates upgrades, creating broad space for the liquid cooling industry chain. AI drives global computing power demand, and under high power conditions, traditional air cooling approaches heat dissipation limits. Liquid cooling will gradually become the mainstream solution, and the liquid cooling market is expected to experience explosive growth. The firm is optimistic about performance release from liquid cooling core component and full-chain solution suppliers.
(4) Under AI demand and domestic substitution logic, the semiconductor equipment industry is expected to usher in a high-speed development period.
AI Enablement: Embodied intelligent robot application implementation, mainly considering technical feasibility and cost-effectiveness. The former emphasizes high fault tolerance, low requirements for execution speed/synchronization, repeatability for error correction, and ease of data collection. The latter emphasizes demonstrating object/task/environment generalization capabilities that can truly improve efficiency or reduce casualties. The firm is optimistic about near-to-medium term embodied intelligent robot applications in industrial logistics (warehousing, handling, sorting, sewing, quality inspection), institutional elderly care, and special environments (converter steelmaking, petrochemicals, power inspection), with long-term prospects of entering households.
Risk Warning: Risks of domestic macroeconomic performance falling short of expectations, industry policy falling short of expectations, new technology penetration falling short of expectations, intensified market competition, significant increases in raw material prices, and tariff and export trade disputes.