Nomura: AI Industry Cycle Has Not Peaked, Significant Upside for China's AI Value Chain
N.R. Finch
Two Nomura analysts argue the AI industry cycle has not peaked — hyperscaler capex may keep rising into next year — while China's AI value chain is poised for earnings expansion as investment catches up and chip supply improves.
AI stocks pulled back — why does Nomura say the cycle hasn't peaked?
Nomura Greater China semiconductor analyst Aaron Teng views the recent AI sell-off as a healthy correction, with the market digesting risk.
His core argument: hyperscalers — Amazon, Microsoft, Google and other large cloud platforms — may increase capital spending further, extending into next year.
This means → the biggest buyers are still ramping up; the demand engine has not stalled, so the cycle has not topped out.
Where will the next bottleneck appear?
Teng notes the supply side still has room to grow, but bottlenecks are shifting from tech giants to smaller component, equipment and materials makers.
In plain terms = the big players are catching up on capacity, but their upstream suppliers cannot keep pace — whoever is in shorter supply gains pricing power.
Nomura's playbook is clear: price increases and earnings upgrades remain the top catalyst; the firm will buy dips. Nomura has already raised its 2026 global AI server revenue forecast by 12%.
Why is China's AI value chain seen as a standout?
Nomura China tech analyst Duan Bing says China's AI value chain still has significant upside because China's AI investment is still catching up to the global market.
Two potential catalysts: improving Chinese AI chip supply + greater spending by large tech and internet companies.
This means → if chip-side constraints ease and capital commitments accelerate, China's AI data-center supply-chain leaders could see earnings and gross-margin expansion in H2 this year and into next year.
CXMT's IPO — why is it called the "biggest beneficiary"?
CXMT (长鑫科技) is reportedly set to list on the Shanghai STAR Market on July 27. Teng describes it as potentially one of the best and greatest stocks ever to IPO in China.
His logic: memory-chip (DRAM — the chip in phones and servers that temporarily stores data) supply is at an unprecedented level of tightness.
This means → CXMT is positioned to gain market share during the memory shortage, making it one of the biggest beneficiaries. Whether the supply squeeze holds will be the key test of that thesis.
Content is for reference only, not financial advice.