Nomura Adjusts Sangfor Technologies' Price Target to 118 Yuan From 65 Yuan, Keeps at Neutral

Chinese artificial intelligence infrastructure stocks may benefit from DeepSeek's recent advancement in its large language model, HSBC Global Research analysts write in a note. DeepSeek's R1 model has demonstrated strong reasoning capabilities at a significantly lower cost, making AI models more accessible for complex enterprise AI productivity tools, they say. Additionally, multiple public companies and local government entities have announced plans to adopt DeepSeek's technologies, which could benefit all-in-one server providers and IDC players, including Sangfor and Shanghai Baosight Software, HSBC says.(jiahui.huang@wsj.com; @ivy_jiahuihuang)

The market size of China's AI all-in-one server industry could reach 149 billion yuan, or about $20.45 billion, in 2028, with software services accounting for a 40% share, HSBC Global Research analysts write in a note. An AI all-in-one service refers to computing hardware with deeply integrated software for AI deployment, they add. This is a new market for software solution providers and subsector leaders stand to benefit more, they say. While Nvidia's GPUs dominate the market, Chinese domestic alternatives, such as Huawei's Ascend solution, are gaining market share in China, they add. Sangfor Technologies is the analysts' preferred sector pick due to its industry-leading position. HSBC Global Research maintains a buy rating on the stock with a target price of CNY158.00. Shares are last at CNY102.01. (jiahui.huang@wsj.com; @ivy_jiahuihuang)