UBS released a research report stating that artificial intelligence will become ZTE's (00763) second growth curve, as telecom operators shift their capital expenditure toward AI computing infrastructure, while ZTE's market share continues to rise. Meanwhile, in the non-operator business segment, the server business is also emerging as a key growth driver. UBS raised ZTE's target price from HK$26.45 to HK$37.7, based on higher earnings growth and target P/E multiples for 2026 and beyond. The firm maintains a "neutral" rating, forecasting that government and enterprise revenue will double year-over-year this year, and estimates that server products will contribute approximately 20% to net profit in 2026. ZTE's second-quarter revenue grew nearly 21% year-over-year, 12% higher than market expectations, primarily driven by increased server product sales amid AI demand, which propelled strong growth in government and enterprise business. During the period, gross profit and net profit fell 4.1% and 12.9% respectively, 2-3% below market expectations, which is believed to be due to declining gross margins caused by the revenue mix shifting toward server products.