VeriSilicon: China’s AI capital expenditure upward cycle drives growth, first coverage buy (Goldman Sachs)
The report predicts that the company's revenue will increase from 1.034 billion yuan in 2025 to 12.579 billion yuan in 2028, with a CAGR of 108% from 2025 to 30.
The report predicts that the company's revenue will increase from 1.034 billion yuan in 2025 to 12.579 billion yuan in 2028, with a CAGR of 108% from 2025 to 30. The core driving force behind this is the upward cycle of capital expenditure on AI computing power by China's leading cloud service providers (CSPs) such as ByteDance, Tencent, and Alibaba, as well as the iteration of the company's products from TG Gen 3 to Gen 4 and Gen 5. The market has a consensus on the long-term trend of domestic substitution of AI chips, but may have underestimated the certainty of VeriSilicon's profitability in 2027 and the potential of its products for widespread application in training and inference scenarios. One-sentence conclusion: VeriSilicon is at the forefront of independent control of China's AI computing power. Benefiting from the unprecedented wave of capital expenditures by domestic cloud giants, VeriSilicon will see explosive growth in performance in the next few years. Good/bad: Good for VeriSilicon (9903.HK) and the entire Chinese AI computing power industry chain. The current stock price has partially reflected the expectation of domestic substitution of AI, but the company's expectations for profitability in 2027 and rapid growth thereafter may not yet be fully priced in. Catalysts: 1) The release and customer introduction progress of next-generation TG Gen 4 and ZK Gen 3 products; 2) Capital expenditure plans of China’s leading CSP; 3) The company’s quarterly financial report, especially revenue growth and gross margin trends.