China's AI supply chain faces a revaluation? Citi optimistic: Optical modules > PCBs > AI servers

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According to information from the Chasewind Trading Desk, a newly released report by Citibank analysts summarizing feedback from investor roadshows in China, the US, and Europe compiles findings from exchanges with 49 institutional investors over the past two weeks. The report shows that long-term investors' interest in Chinese tech stocks has significantly increased, with market focus centered on the AI supply chain.

Citi has explicitly prioritized AI supply chain investment as follows: optical modules (with scale-up opportunities) > PCB sector > ODMs for AI servers with growing demand.

The report specifically points out:

There is potential upside for high-speed optical modules in 2027, mainly driven by expansion opportunities not yet priced in. PCB supply shortages may persist through 2026, and the most aggressive companies (such as Shenghong Technology) may gain extra demand from ASICs while maintaining a strong position in NVIDIA’s supply chain.

Regarding capital expenditure for AI in China, investors are focusing on the investment scale needed for Alibaba's data center 10x expansion, AI chip supply capabilities, and paths to monetize AI investment.

The report states that 7nm equivalent wafer capacity should be sufficient to support domestic AI chip demand in 2026 (even if demand doubles from 2025). In terms of AI monetization, investors generally agree that it's difficult to cash out in the ToC sector, while ToB is mainly targeting software products for SMEs. Additionally, there is rising investment interest in smart glasses as AI edge devices.

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