The year of alpha dispersion has continued and gone even more extreme during the week, where outperfomers like memory keep chugging along, while MAGS remain soft and software still not catching a breath. We expect this environment of alpha seeking would probably extend into rest of the year, and would strive to keep identifying new opportunities in our research.
Before we jump into weekly review, we would like to express our gratitude to the renowned Adtech industry veteran Jim Payne, for acknowledging the value of our AI Agent. As always, any feedback on the agent platform is welcomed!
This week’s reports
TSMC’s blowout results - We had our preview earlier in the week, and the actual financial results were generally in line with our expectation. What blew the mind of market is management’s uber-bullish comment on AI demand as “endless”, as well as the Capex guidance that exceeded even the most bullish investors’ expectation. We continue to believe in the strong up-cycle of SPEs like AMAT and ASML.
Follow-up discussion on AXTI and InP export control - This remains a heated discussion in the market and weighed on the optical sector. We hereby provided a more thorough analysis on the manufacturing process of InP-based lasers, the global distribution of supply and epitaxy capacity and the operation of different segments throughout the value chain to demonstrates why the export control has more limited impact than most assumed.
A landmark moment for Gemini and GCP - GOOGL and AAPL announced that Siri would adopt Gemini and GCP to provide AI capabilities in a multi-year deal. Rather than a near term demand spike, we believe this is more meaningful for GCP’s long term structural growth, as this could led to a major workload migration to GCP by Apple, followed by other potential large customers.
China AI labs are going big into Lunar New Year - as Lunar New Year approaching in mid-Feb, we expect many new major updates by the Chinese AI labs in coming weeks. BABA has kicked off with a major Qwen app update on Jan 15, rolling out agent features integrating the other Alibaba ecosystem apps like food delivery and travel. We detailed the next updates you should pay attention to.
Next week’s pipeline
ASML update
Space industry overview
