The current wave of technological advancement driven by generative AI is extensive, far-reaching, and involves multiple segments of the industrial chain. BOCOM INTL predicts that AI infrastructure investment will maintain robust growth through at least 2026.

The firm expects U.S. semiconductor design and foundry companies—including NVIDIA (NVDA.US), Broadcom (AVGO.US), and TSMC (TSM.US)—to continue benefiting from AI infrastructure expansion. Meanwhile, it remains bullish on opportunities in China’s domestic AI and localization supply chains, highlighting stocks such as NAURA (002371.SZ), Will Semiconductor (603501.SH), AMEC (688012.SH), and HUA HONG SEMI (01347.HK).

BOCOM INTL forecasts major cloud providers’ capital expenditures to grow over 30% in 2026. Cloud service revenue from these players accelerated post-Q2 this year, reaching multi-year highs. While spending as a percentage of operating cash flow remains elevated, the bank views systemic overinvestment risks as manageable.

Additionally, the firm maintains optimism about localization opportunities in critical supply chains, anticipating policy support during China’s 15th Five-Year Plan period to accelerate the substitution process. It notes mainland cloud service providers’ capex could surge 49% YoY in 2025, potentially sustaining elevated levels through 2026-2027.