Huayuan Securities: AI and Web3 are short-term disrupted by macro factors, industry trends remain the long-term dominant factors

According to the Zhitong Finance APP, Huayuan Securities released a research report stating that last week, technology stocks experienced fluctuations after an initial decline. In terms of overseas AI, SMCI (SMCI.US) announced its FY4Q24 performance, which fell short of market expectations. The revenue growth was mainly driven by the company's leading position in the artificial intelligence infrastructure market. In the Web3 and crypto markets, combined with macro factors, there was increased volatility in the prices of core crypto assets during the week. The significant drop in prices of core crypto assets on Monday was driven by a series of negative factors, including panic selling due to the yen rate hike, weak employment data, slowing growth of major tech stocks, and concerns about economic recession resurfacing. Overseas AI: SMCI released its FY4Q24 performance on August 6th this week, which was below market expectations. In FY4Q24, SMCI achieved revenue of $5.31 billion (yoy +143%, qoq +37.9%) and net profit of $350 million (yoy +82.2%, qoq -12.4%). The single-quarter revenue hit a record high, with revenue growth mainly benefiting from the company's technological and product leadership in the AI infrastructure market, driven by strong demand for the next-generation air-cooled and direct liquid-cooled rack-level AI GPU platforms. The gross profit margin for FY4Q24 was 11.2%, a decrease of 5.8% year-on-year and 4.3% quarter-on-quarter. The lower-than-expected net profit was mainly due to the high initial costs of increasing production of the new DLC AI GPU cluster and changes in product and customer mix, as the company focuses on providing competitively priced offerings. Regarding the highly anticipated situation with Blackwell, SMCI does not expect revenue in FY1Q25, with some sales expected in FY2Q25 mainly from small batch engineering samples, and real sales expected in FY3Q25. The company expects revenue for the fiscal year 2025 to be between $26 billion and $30 billion, with revenue in FY1Q25 expected to be between $6 billion and $7 billion. Sector Review: Technology stocks experienced fluctuations this week (August 5th to August 9th, 2024), with an initial decline followed by a rise. The Hang Seng Technology Index closed at 3436.8, up 1.5%, outperforming the Hang Seng Index by 0.6%; the Philadelphia Semiconductor Index closed at 4709.5, up 2.2%, outperforming the Nasdaq 100 and S&P 500 indices. This week saw intensive financial report releases, with SMCI's report falling short of expectations and its stock price dropping significantly. In terms of individual stocks, the top 5 gainers this week were DUOLINGO (+16%), CONSTELLATION ENERGY (+14%), TSMC (+12%), E-MARK Technology (+11%), and CROWDSTRIKE (+11%); the top 5 decliners were AMD (-19%), WOLFSPEED (-17%), Dell Technologies (-10%), and XPeng (-9%). Web3 and Crypto Market: 1) This week, spot ETFs experienced net inflows after significant outflows. According to Farside data, spot ETFs for core crypto assets experienced significant net outflows at the beginning of the week, with outflows of $168 million on Monday and $149 million on Tuesday; This Wednesday and Thursday, spot ETFs received net inflows of USD 0.45 billion and USD 1.95 billion, respectively. 2) In addition to macro factors, the price volatility of core encrypted assets intensified this week. The price volatility of core encrypted assets intensified this week, with a significant drop below USD 50,000 at one point on Monday. The sharp decline in the price of core encrypted assets on Monday was driven by a series of negative factors, including panic selling due to the yen interest rate hike, weak employment data, slowing growth of major tech stocks, and renewed concerns about economic recession. The price of core encrypted assets started to rebound on Tuesday and broke through USD 60,000 on Friday. Sector Review: 1) This week, the total market value of global cryptocurrencies decreased, and the market sentiment is currently in a neutral range. According to CoinMarketCap data, as of August 10, 2024, the total market value of the global cryptocurrency spot market reached USD 2.11 trillion, a decrease from USD 2.19 trillion the previous Saturday. In terms of trading volume, as of August 10, 2024, the global cryptocurrency total trading volume was USD 67.2 billion, accounting for 3.18% of the total market value. 2) This week, the mining and mining machine stocks in the cryptocurrency market showed divergent trends. In terms of individual stocks, the top 5 companies with the highest increase this week were BitFuFu, Core Scientific, BitDeer Technologies Group, Stronghold Digital Mining, and Bitfarms. Investment Analysis Opinion: Overseas AI: Large-scale model rapid iteration, significant improvement in practicality, AIPC new products to be launched successively in the near future, accelerating the landing of AI edge, first recommendation is BYD Electronics, suggest focusing on core varieties such as Apple, Microsoft, Qualcomm, as well as OEM, WOA and other sectors. Web3: The progress of regulatory compliance of core encrypted assets is accelerating, and future prices are expected to continue to be influenced by core driving factors such as Fed interest rates, net inflows of spot ETFs, and elections. It is recommended to focus on exchanges, coin hoarding, mining, and pay attention to the valuation resonance brought by the synergy of AI+Web3 business. In the short term, pay attention to liquidity disturbances caused by macro factors. Risk Warning: Development of large-scale model technology falling short of expectations, slower-than-expected recovery of terminal demand such as PCs/smartphones, and sharp fluctuations in the US federal funds rate