OFC exceeds expectations, Guangzhao Da A — Guotai Communication ETF (515880) review

I. Market Performance

After the Shanghai Composite Index fell below 4,000 points during trading yesterday, the market opened relatively stable today. The Shanghai Composite Index fluctuated within a narrow range, while driven by computing power, the ChiNext Index rose over 2%. Today, overseas computing power was strong, and the Communication ETF Guotai (515880) increased, at one point exceeding 5%.

Data source: Wind

II. Analysis of Upward Factors

The main reason for today’s increase is the recent OFC conference guidance exceeding expectations, with stocks like LUMENTUM and COHERENT surging in the U.S. markets yesterday. The main points of information from the conference are as follows:

1. The optical module market size is expected to double in 2027 following a 1.5-2x growth in 2026. According to the proportions from networks like Nvidia and Google, the optical module market size in 2026 may see a 1.5-2x increase, with leading manufacturers potentially experiencing a growth rate of 2-3x due to the leader effect and scale effect. Looking ahead to 2027, the optical module market size may continue to double.

2. CPO penetration: Coherent predicts that by 2030, the CPO scale will reach $15 billion, with Coherent guiding that the SAM for DCI modules in 30 years will be $6 billion.

3. Scale across demand translates to a 14x demand for WAN bandwidth. Scale across is a somewhat emerging concept, which integrates multiple data centers into a single large AI factory by adopting Ethernet that supports cross-scale networks. It is evident that such a scale of connectivity will inevitably lead to a significant increase in demand for optical modules, optical fibers, and more.

Data source: Nvidia

III. Market Outlook

Strong fundamental demand, with ongoing strong expectations following the AI wave. In our commentary on “The Long Night Will Eventually End—Commentary on the Sharp Drop of Communication ETF Guotai,” we mentioned that current foreign institutions like UBS expect AI Capex to reach $1 trillion by 2028; however, based on current industry information, a $1 trillion capex scale by 2027 is still insufficient. The reason is that financial institutions underestimate the cash flow gains brought about by the scaling of AI inference and the subsequent speed of AI performance enhancement.

From an investment perspective, computing power, storage power, and transportation power are interlinked. However, in the short to medium term, it is essential to focus on the overseas AI chain that has entered a phase of rapid growth; on one hand, overseas transportation power (communications) is thriving under strong performance support; on the other hand, the recently obvious pullback in storage capacity expansion (semiconductor equipment) reveals cost-effectiveness.

1. In terms of overseas computing power, this mainly refers to the semiconductor industry chain driven by GPU/ASIC demand, which, affected by global division of labor, does not currently have a better ETF in the A-shares.

2. In terms of overseas transportation power, A-share listed companies in the optical module, server ODM, and other industry chains possess a global leading advantage and are expected to continue enjoying core dividends in the rapidly growing industry scale. However, after 2026, with the rollout of new technologies like CPO, more possibilities will emerge. Aside from the strong getting stronger, up-and-coming players may also appear. For ordinary investors, ETFs remain a good way to stay consistent and innovative, with attention to Communication ETF Guotai (515880).

3. In terms of storage capacity, the regional division is not as clear-cut as with GPUs, and storage price increases are a global phenomenon. Therefore, with global storage price increases, A-share module companies directly benefit. Moreover, the price increase in storage drives the expectation of capacity expansion, making semiconductor equipment worth closely monitoring; investors can pay attention to the semiconductor equipment ETF (159516).

However, it should be noted that despite the rapid progress in the industry, risks such as liquidity and emotional volatility cannot be ignored. Recently, influenced by the Federal Reserve’s policy expectations, Middle Eastern geopolitical conflicts, and other events, global stock markets are experiencing intense competition, with overall risk appetite declining, reminding everyone to be cautious about risks and that positioning at lower prices may lead to a better experience.

Risk Warning: Mention of individual stocks is solely for industry event analysis and does not constitute any stock recommendation or investment advice. Short-term fluctuations in indices are for reference only and do not represent future performance, nor do they constitute a commitment or guarantee regarding fund performance. Views may be adjusted with changes in market conditions and do not constitute investment advice or commitments. The risk-return characteristics of mentioned funds vary; investors are advised to carefully read the fund’s legal documents, fully understand product elements, risk levels, and profit distribution principles, and choose products that match their risk tolerance for cautious investment. For fund fees, please refer to legal documents. For fund fees, please refer to legal documents.

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