Morning News

Source: Wall Street News

## Market Overview

As the deadline for Trump's tariffs on August 1 approaches, U.S. PCE data indicates inflationary pressures, and key non-farm payroll data is imminent, market risk aversion has heated up. U.S. stocks erased early gains, with all three major indices closing lower. Both the Nasdaq and S&P 500 pulled back more than 1% from their daily highs.

The market value of the "Magnificent Seven" tech giants hit new highs, with Microsoft's market value once exceeding $4 trillion, and Meta surged 11%. After Thursday's after-hours earnings report, Apple rose more than 3% at one point, while Amazon plummeted 7%. The Philadelphia Semiconductor Index plunged 3.1%, its biggest one-day drop in nearly four months. Trump demanded that pharmaceutical companies lower U.S. drug prices, leading to a broad decline in pharmaceutical stocks, with Novo Nordisk falling nearly 6%.

U.S. Treasury yields rose across the board, with the 2-year yield up 1.2 basis points. The U.S. dollar recorded a sixth consecutive gain, rising more than 0.2%, with a 3.5% increase in July, marking its first monthly rise since December last year.

Gold rose nearly 1.2% intraday, while crude oil fell 1.1%. Domestic futures night session fell broadly, with coking coal closing down 3.05% and glass down 2.62%.

During the Asian session, A-shares and H-shares both fell in the afternoon. The Shanghai Composite Index dropped more than 1%, AI computing power stocks bucked the trend, the Hang Seng Index lost the 25,000-point mark, Laopu Gold fell more than 8%, national bonds rose across the board, and commodities plummeted.

## Key News

- **State Council Executive Meeting**: Adopted the "Opinions on In-depth Implementation of the 'Artificial Intelligence +' Action", and implemented interest subsidy policies for personal consumer loans and operating entities in the service industry.

- The Cyberspace Administration of China interviewed NVIDIA regarding the security risks of backdoors in H20 computing chips. According to Yicai, NVIDIA responded: "Cybersecurity is of crucial importance to us. NVIDIA chips do not have 'backdoors' and do not allow anyone to remotely access or control these chips."

- Tariff incentives stimulated early consumption. Apple's revenue in the last quarter recorded the highest growth rate in three and a half years. "National subsidies" helped its revenue in China "turn positive" for the first time in two years, with its stock price rising more than 3% in after-hours trading.

- Amazon plummeted 7% in after-hours trading due to weak guidance, as its cloud business growth lagged behind Microsoft and Google, and profit margins declined.

- Tech IPO boom: Figma opened 157% higher on its first day of listing, with a valuation of approximately $50 billion, and closed up 250%.

- A new leader in the memory market has emerged. With the advantages of HBM, SK Hynix surpassed Samsung for the first time in Q2 to lead the global market. Samsung Electronics' Q2 operating profit plummeted by more than half, dragged down by a 94% plunge in its chip business.

- The fate of reciprocal tariffs is uncertain: A key trial in a U.S. appeals court opened arguments, with judges questioning Trump's authority.

- Trump said the U.S.-Mexico tariff agreement will be extended for 90 days. The Mexican peso hit a daily high, and the stock index turned higher. After the tariff deadlock, Trump denounced India as a "dead economy".

- Trump threatened to use "all tools" to force pharmaceutical companies to cut prices within 60 days, leading to a broad decline of more than 4% in pharmaceutical stocks.

- The Fed's favorite inflation indicator unexpectedly rebounded. The U.S. core PCE price index rose 2.8% year-on-year in June, a 4-month high.

- The Bank of Japan kept interest rates unchanged and raised its inflation expectations for this year and next. Kazuo Ueda stated that interest rate hikes depend on the possibility of "inflation reaching the target", and the current yen exchange rate has not deviated significantly from expectations; the yen once fell below 150.

- World Gold Council: Central bank gold purchases in Q2 hit a three-year low, while ETFs took over to support gold demand.

## Market Closing Quotes

- **U.S. and European Stocks**:

 - S&P 500 Index fell 0.37% to 6,339.39 points.

 - Dow Jones Industrial Average fell 0.74% to 44,130.98 points.

 - Nasdaq Composite Index fell 0.03% to 21,122.45 points.

 - Europe's STOXX 600 Index closed down 0.75% to 546.11 points.

- **A-shares**:

 - Shanghai Composite Index closed at 3,573.21 points, down 1.18%.

 - Shenzhen Component Index closed at 11,009.77 points, down 1.73%.

 - ChiNext Index closed at 2,328.31 points, down 1.66%.

- **Bond Market**:

 - The yield on the 10-year U.S. Treasury note fell 1.79 basis points to 4.3521%, with a cumulative increase of 12.41 basis points in July.

 - The 2-year U.S. Treasury yield fell 0.20 basis points to 3.9386%.

- **Commodities**:

 - WTI September crude oil futures closed down 1.06% at $69.26 per barrel, with a cumulative increase of 8.47% in July.

 - Brent September crude oil futures fell 0.97% to $72.53 per barrel, with a cumulative increase of 8.67% in July.

 - COMEX gold futures fell 0.16% to $3,290.60 per ounce.

## Details of Key News

### Global Highlights

- **State Council Executive Meeting**: Adopted the *Opinions on In-depth Implementation of the "Artificial Intelligence+" Action*, and implemented interest subsidy policies for personal consumer loans and operating entities in the service industry. The meeting reviewed and approved the *Opinions on In-depth Implementation of the "Artificial Intelligence+" Action*, arranged for the implementation of interest subsidy policies for personal consumer loans and service industry business entities, and discussed and approved in principle the *Draft Law of the People's Republic of China on Cultivated Land Protection and Quality Improvement*.

- The Cyberspace Administration of China interviewed NVIDIA regarding security risks related to vulnerabilities and backdoors in H20 computing chips. On July 31, 2025, the Cyberspace Administration of China interviewed NVIDIA, requiring the company to explain the security risks of vulnerabilities and backdoors in H20 computing chips sold to China and submit relevant certification materials.

- According to Yicai, late on July 31, in response to reports of serious security issues in NVIDIA's computing chips, NVIDIA stated: "Cybersecurity is crucial to us. NVIDIA chips do not have 'backdoors' and do not allow anyone to remotely access or control these chips."

- Tariff incentives stimulated early consumption: Apple's revenue in the last quarter achieved the highest growth rate in three and a half years, and "national subsidies" helped its revenue in China "turn positive" for the first time in two years. Apple's Q2 revenue exceeded expectations, with a year-on-year increase of nearly 10%. The gross profit margin fell to 46.5% but remained at the high end of the guidance range, with the current quarter's guidance at 46%-47%. iPhone sales in Q2 increased by over 13%, Mac sales were at least 10% higher than analysts' expectations, iPad sales declined by 8%, and service revenue hit a new high with a 13% increase. Cook said Apple will significantly increase AI investment; "national subsidies" have helped its business in China; tariffs added $800 million in costs in Q2, $100 million lower than his previous expectation, and such costs are expected to increase by $1.1 billion in the current quarter; the current quarter's revenue is expected to grow in the mid-to-high single digits, higher than analysts' expectations. Apple's stock price rose more than 3% in after-hours trading.

- Amazon plummeted 7% in after-hours trading due to weak guidance, as its cloud business growth lagged behind Microsoft and Google, and profit margins declined. Amazon reported better-than-expected Q2 revenue and profit, but its cloud business AWS grew slower than competitors Microsoft and Google, and its Q3 operating profit guidance was weak, triggering market concerns about its heavy investment in artificial intelligence and cost control. As a result, the stock price fell more than 7% in after-hours trading. AWS's profit margin hit a 1.5-year low, and free cash flow also declined significantly. Analysts warned that AWS may be surpassed by Microsoft Azure next year.

- Tech IPO boom: Figma rose 157% on its first day of listing, with a valuation of approximately $50 billion, and closed up 250%. Figma listed on the New York Stock Exchange on Thursday, with an opening price of $85, surging 157% from the IPO price of $33, and closing above $115. This is the largest U.S. software company IPO since the beginning of 2024, with over 40 times subscription, and more than half of the applications were not allotted, indicating strong market demand. It also pushed the scale of new stock offerings in U.S. stocks to exceed $21 billion this year, suggesting a comprehensive recovery in the tech IPO market may be imminent. CEO Dylan Field stated that after listing, the company will still focus on customers and products, continue to increase AI integration, and seek "large-scale" acquisition opportunities.

- A new leader in the memory market is born! With HBM advantages, SK Hynix surpassed Samsung for the first time in Q2 to lead the global market. SK Hynix's memory revenue in Q2 reached 21.8 trillion won. Benefiting from strong demand for HBM from AI chip customers such as NVIDIA, its HBM market share reached 62%. In contrast, Samsung's memory revenue was 21.2 trillion won, with a HBM share of only 17%, and it has not yet obtained certification for NVIDIA's most advanced products. Samsung may cut prices for its HBM3E memory.

- Samsung Electronics' Q2 operating profit plummeted by more than half, dragged down by a 94% plunge in its chip business. Samsung Electronics' Q2 performance declined significantly, with operating profit falling 55.8% year-on-year to 4.7 trillion won, far below the market expectation of 5.33 trillion won, mainly due to a 94% plunge in chip business profits. The predicament of the memory business dragged down overall performance, and the operating profit of the Device Solutions division plummeted 85%. Samsung's stock price fell 1.65% intraday.

- The fate of reciprocal tariffs is uncertain: A key trial in a U.S. appeals court opened arguments, with judges questioning Trump's authority. Judges questioned whether the IEEPA, the legal basis for the Trump administration's tariff imposition, can authorize the president to completely rewrite the tariff schedule formulated by Congress in a state of emergency. Justice Department lawyers defending the case stated that Congress hopes to provide the president with "broad and flexible powers" in emergencies, which can be used as a tool to put pressure on trading partners. Lawyers representing the plaintiffs warned that if the defendant is agreed with, the president can do whatever he wants at any time, as long as a state of emergency is declared.

- As the tariff deadline approaches, the U.S. has increased pressure, and many countries have rushed to Washington for overnight negotiations. Reports say that important U.S. allies Canada and Mexico have sent delegations to hold intense closed-door talks with U.S. officials. On Wednesday evening, Trump announced that he had reached an agreement with South Korea and said he would hold last-minute negotiations with India. White House officials confirmed that Trump plans to sign a new executive order on Thursday to impose higher tariffs on countries that fail to reach trade agreements.

- Trump said the U.S.-Mexico tariff agreement will be extended for 90 days. The Mexican peso hit a daily high, and the stock index turned higher. Trump said that during the 90 days, Mexico will continue to pay 25% tariffs on fentanyl, 25% tariffs on automobiles, and 50% tariffs on steel, aluminum, and copper; the U.S. and Mexico will conduct consultations, aiming to sign a trade agreement within 90 days or longer; Mexico agreed to immediately remove many non-tariff trade barriers. The Mexican president said he had a 40-minute call with Trump, and the two sides agreed to delay the 30% tariffs on Mexico announced by Trump on July 12 for 90 days, using this period to continue negotiations to reach a long-term agreement.

- After the tariff deadlock, Trump denounced India as a "dead economy." Trump said: "We have almost no business with India. Their tariffs are exorbitant, among the highest in the world. I don't care what India does with Russia. They can ruin their stagnant economies together, I don't care at all."

- Trump threatened 25% tariffs, Indian stocks fell, with pharmaceuticals and consumer electronics bearing the brunt. Reports say there are signs of trouble in U.S.-India negotiations, as the U.S. hopes India will further open its agricultural market. However, agriculture is a "politically sensitive" area for Indian Prime Minister Modi, and he may find it difficult to make concessions. Although there is no specific information on tariff rates for industries, Indian pharmaceutical, electronic products, textile and apparel, gem and jewelry, and oil refining sectors may be significantly impacted. India's SENSEX 30 index opened nearly 1% lower and then rebounded slightly. In terms of individual stocks, Indian pharmaceutical company Dr. Reddy's opened 1.36% lower, and Indian Oil in the oil refining industry opened down more than 3%.

- U.S. Commerce Secretary said "reached trade agreements with Cambodia and Thailand" but did not announce the tax rates. Lutnick claimed to have reached trade agreements with Cambodia and Thailand but did not disclose the specific tax rates. This move followed the ceasefire on the Cambodia-Thailand border, echoing Trump's condition of "ceasefire first, then trade talks" proposed on July 26. It is reported that Malaysia will also announce a trade agreement with the U.S. on Thursday.

- Trump threatened to use "all tools" to force pharmaceutical companies to cut prices within 60 days, leading to a broad decline of more than 4% in pharmaceutical stocks. Trump sent letters to 17 pharmaceutical companies, ordering them to cut prices by September 29, otherwise "all means" will be used. The companies involved include giants such as Eli Lilly, Pfizer, and Merck. After the news, GlaxoSmithKline and Merck fell more than 4%, Novo Nordisk fell 5%, and Sanofi plummeted more than 7%.

- The Fed's favorite inflation indicator unexpectedly rebounded. The U.S. core PCE price index rose 2.8% year-on-year in June, a 4-month high. The June PCE data intensified the Fed's policy differences. On the one hand, core inflation rebounded and is still higher than the target; on the other hand, consumption and income growth have shown signs of weakness.

- Moving towards "shadow QE"? Bessent wants to dominate U.S. bond interest rates. The U.S. Treasury announced an expansion of long-term bond repurchase scale, while maintaining the scale of medium and long-term bond issuance unchanged, and continuing to rely on short-term bonds to make up for the fiscal deficit. Considering that Bessent has publicly expressed concern about the high long-term bond yields, the market generally interprets the Treasury's move as a means of "shadow QE" to suppress long-term yields against the background that the Federal Reserve is unwilling to further cut interest rates.

- The Bank of Japan kept interest rates unchanged and raised its inflation expectations for this year and next. Kazuo Ueda: Interest rate hikes depend on the possibility of "inflation reaching the target"; the current yen exchange rate has not deviated significantly from expectations; the yen once fell below 150!

- The Bank of Japan reiterated that it will raise interest rates if the economic and price outlook is achieved. It raised its core CPI forecast for fiscal 2025 from 2.2% to 2.7%, and for fiscal 2026 from 1.7% to 1.8%.

- Kazuo Ueda emphasized that he will pay close attention to upward inflation risks and will not wait until the underlying inflation rate stabilizes at around 2% before raising interest rates, but depends on the possibility of the underlying inflation rate reaching that level; the impact of tariffs should be viewed from the perspective of higher costs brought by tariffs, and hopes to observe this impact in more hard data.

- World Gold Council: Central bank gold purchases in Q2 hit a three-year low, while ETFs took over to support gold demand. Gold ETFs in the Chinese market saw inflows of 46.4 billion yuan in Q2, the strongest quarterly performance ever, further driving global gold ETF demand to grow significantly for two consecutive quarters. Central banks slowed down their gold purchasing pace in the second quarter, with purchases hitting the lowest level since 2022. Nevertheless, the World Gold Council believes that geopolitical and economic uncertainties will prompt central banks to continue buying gold.

### Domestic Macroeconomics

- China's official manufacturing PMI fell to 49.3 in July, the new orders index fell to 49.4, and the non-manufacturing sector remained expanding. In July, affected by factors such as the manufacturing industry entering the traditional production off-season and high temperatures and rainstorms in some areas, the PMI dropped to 49.3%, and the manufacturing prosperity level fell from the previous month. The new orders index was 49.4%, down 0.8 percentage points from the previous month, indicating that manufacturing market demand has slowed down.

- Tao Chuan believes that there are two unusual signals in the July PMI worth attention: first, the differentiation of the "anti-involution" policy effects, although price expectations have improved immediately, production has begun to slow down阶段性; second, the change in export prosperity after entering a new stage of trade, the release of the leading PMI new export orders index predicts the marginal downward pressure on exports in July.

- Guosheng Securities believes that the manufacturing PMI in July has been in the contraction range for the fourth consecutive month and is weaker than seasonal, reflecting the slowdown in economic expansion, which may be related to the off-season, high temperatures and rainstorms, and the "anti-involution" policy. The rebound in the price index indicates that the decline in PPI has narrowed, but export orders have fallen and domestic demand has weakened. It is expected that subsequent policies will focus on "supporting without overstimulating" and pay attention to the progress of Sino-U.S. trade negotiations.

- Ministry of Commerce: China and the U.S. will continue to promote the 24% part of the suspended U.S. reciprocal tariffs and China's countermeasures to be extended for 90 days as scheduled. Ministry of Commerce Spokesperson He Yadong stated at the regular press conference held by the Ministry of Commerce on July 31 that in accordance with the consensus of the Sino-U.S. economic and trade talks in Stockholm, the two sides will continue to promote the 24% part of the suspended U.S. reciprocal tariffs and China's countermeasures to be extended for 90 days as scheduled, further stabilize Sino-U.S. economic and trade relations, and inject more certainty into the development and stability of the world economy.

- National Development and Reform Commission: Increase efforts to stabilize investment and promote consumption, focus on stabilizing employment and expanding domestic demand to do a good job in policy research and reserve. The meeting emphasized that we should focus on major changes, important indicators, and major issues to conduct situation analysis and judgment, focus on stabilizing employment and expanding domestic demand to do a good job in policy research and reserve, and strengthen the consistency of macro policy orientations. Increase efforts to stabilize investment and promote consumption, expand investment increments, strengthen the whole-cycle management of government investment projects, strive to stimulate the vitality of private investment, promote the construction of "two key areas" with high quality, implement the "two new" policies with improved quality and efficiency, and stimulate market vitality to boost consumption.

- Hong Kong looks forward to relaxing restrictions on capital flowing south for property purchases. Hong Kong Financial Secretary Paul Chan revealed that he is studying with central agencies to relax restrictions on mainland capital purchasing properties in Hong Kong, mainly targeting mainland talents coming to Hong Kong. Currently, nearly 220,000 mainland talents have arrived in Hong Kong. Paul Chan pointed out that these talents bring their families and have relatively high income levels, and will be the purchasing power in the property market.

- The regulatory rules for the issuance of stablecoins in Hong Kong have been implemented. What are the focus points? Western Securities believes that the regulatory tone for stablecoin issuance in Hong Kong is relatively tight, with four key points: first, the licensing threshold is high, requiring the establishment of an entity in Hong Kong with a paid-in capital of not less than HK$25 million, and it is expected that the first batch of single-digit licenses will be issued in early next year; second, existing issuers can obtain a 6-month transitional period for temporary licenses, which is relatively tight; third, reserve assets must be fully supported and their investment is strictly restricted, but Hong Kong dollar stablecoins are allowed to invest in U.S. dollar assets; fourth, anti-money laundering requirements are strict, and transactions above HK$8,000 require review.

### Domestic Companies

- Hon Hai formed an alliance with TECO through share swaps. Goldman Sachs is optimistic that the former's AI revenue will double next year! Goldman Sachs pointed out that this cooperation is expected to enhance Hon Hai's overall competitiveness in the AI server field, and it is expected that Hon Hai's AI server business revenue will grow by 110% and 59% year-on-year in 2025 and 2026 respectively. Goldman Sachs maintained Hon Hai's "buy" rating with a target price of NT$242, implying a 41.1% upside from the current level.

- ByteDance's Seed team released a diffusion language model with an inference speed of 2146 tokens per second. Seed Diffusion Preview aims to systematically verify the feasibility of the discrete diffusion technology route as the basic framework of the next-generation language model in the experimental field of structured code generation. Experimental results show that its code inference speed can reach 2146 tokens/s, which is 5.4 times faster than autoregressive models of the same scale.

- JD.com is acquiring German consumer electronics retail giant Ceconomy for 2.2 billion euros, aiming to achieve "one-hour delivery in Europe". Ceconomy operates more than 1,000 stores in 12 European countries with approximately 50,000 employees, which will provide JD.com with an existing European offline network and supply chain resources, which is expected to solve the long-standing problems of insufficient supply and运力短缺 in its overseas business, and compress the delivery time in the European market from 2-3 days to hours. This transaction also reflects a major adjustment in JD.com's internationalization strategy, shifting from cross-border e-commerce to local e-commerce overseas.

- Wen Yuan Zhi Xing's total revenue in Q2 increased by 60.8% year-on-year, and robotaxi business revenue surged 836.7%. The net loss was 406.4 million yuan, slightly improved from 413.6 million yuan in the same period last year.

### Overseas Macroeconomics

Once again, the logic of the global market is about to change! The U.S. economy rebounded more than expected in the second quarter, the U.S. dollar may see its first monthly gain in 2025, and U.S. stocks continue to hit new all-time highs driven by the AI boom. The easing of global trade tensions has undermined the previous premium logic of "non-U.S. assets" represented by the euro, gold, and emerging markets.

"False prosperity" of U.S. GDP: A collapse in imports boosted overall growth, but core demand growth slowed sharply. Real imports plummeted 30.3% in the second quarter, largely offsetting the 37.9% surge in the first quarter and artificially inflating the overall GDP data. As a core indicator reflecting endogenous economic momentum, the growth rate of domestic private final purchases has plummeted from 2.7% in the previous year to 1.2%, indicating signs of cooling within the U.S. economy. Morgan Stanley predicts that the year-on-year growth rate will reach 1.0% in the fourth quarter of 2025 and 1.1% in 2026, far below the strong performance in 2024.

Interest rate market repricing: The possibility of the Federal Reserve Chairman stepping down early further decreases. Data from the interest rate market and forecasting platform Polymarket both show that the implied probability of Powell stepping down early this year has further declined. If the implied probability of a 50-basis-point drop in the federal funds rate by December is regarded as the possibility of Powell being replaced by an extremely dovish figure, both the interest rate market and Polymarket data indicate that the probability of this happening is decreasing.

Nomura: The new agreement fails to meet the "deficit reduction target," and U.S.-Japan tariff issues are far from over. Nomura stated that the U.S.-Japan agreement is expected to reduce Japan's trade surplus with the U.S. by only about 70%, so the Trump administration may continue to exert pressure, including imposing new tariffs on the pharmaceutical and semiconductor industries. Nomura expects the agreement to reduce Japan's real GDP by about 0.55%, and the probability of Japan's economy falling into recession by the end of 2026 is 50%.

Fed's hawkish stance hits the Indonesian rupiah hard, and Bank Indonesia intervenes urgently. The Indonesian rupiah fell to 16,460 against the U.S. dollar on Thursday, hitting a more than one-month low. Bank Indonesia intervened in the exchange rate through various means such as spot transactions and non-deliverable forward contracts to cope with the pressure of a stronger U.S. dollar caused by the Federal Reserve's hawkish stance.

### Overseas Companies

Android's monopoly is broken; Google loses the Epic case and may be forced to relax app store restrictions. Google, a subsidiary of Alphabet, lost a ruling in an antitrust lawsuit filed by *Fortnite* developer Epic Games that requires Google to revise its app store policies. This ruling means that Google will have to relax restrictions on the Google Play Store, allowing app developers to establish competitive markets and use alternative billing systems. Google stated that it may appeal to the U.S. Supreme Court next.

"American Tieba" Reddit's Q2 revenue soared 78%, and its stock price surged 19% after hours. The company's Q2 results comprehensively exceeded market expectations. Revenue increased 78% year-on-year to $500 million, far exceeding the expected $426 million. Earnings per share reached 45 cents, more than twice the expected. Net profit turned from a $10 million loss in the same period last year (affected by IPO costs) to a $89 million profit.

Report: OpenAI's revenue doubles, annualized revenue reaches $12 billion, and ChatGPT's weekly active users reach 700 million. OpenAI doubled its revenue in the first seven months of this year, with annualized revenue reaching $12 billion, a significant increase from the approximately $4 billion in 2024, and is expected to exceed its 2025 revenue target of $12.7 billion. ChatGPT's weekly active users increased from 500 million in March to 700 million. While growing rapidly, OpenAI's cash burn is also accelerating, raising its 2025 cash burn forecast to about $8 billion, an increase of $1 billion from the previous forecast.

GPT-5 leak spreads wildly online; it unifies GPT and o-series for the first time, with programming demo exposed in advance, possibly to be released next week. Now, GPT-5 is "encountered" everywhere online. Traces of GPT-5 have been found not only on ChatGPT but also in the model list of MacOS applications. Judging from the leaked information, GPT-5 will definitely be more powerful. It will integrate the GPT series and o-series, achieve unified multimodality and reasoning capabilities, have strong programming capabilities, support million-token context, MCP, etc.

Wedbush analyst: Apple cannot achieve AI innovation on its own; a $40 billion acquisition of Perplexity is the only way out. Apple's predicament in AI innovation is "obvious," and it is suggested that the company spend $40 billion to acquire AI search platform Perplexity. The suggestion comes as Apple is about to release its earnings report, and investors' concerns about the company's slow progress in AI continue to rise.

Microsoft conference call: Nadella confidently announces "Microsoft leads in AI infrastructure." Microsoft has added more than 2 gigawatts of data center capacity in the past 12 months and operates more than 400 data centers in 70 regions worldwide, larger than any other cloud service provider. The monthly active users of the company's AI functions have exceeded 800 million, and the adoption rate of Copilot by customers is faster than any other new product in the Microsoft 365 suite, achieving the largest seat growth since its launch this quarter. The rapid growth of Azure cloud services is largely due to the continued active migration activities of enterprises, and the continuous expansion of new AI workflows and cloud-native applications has also driven Azure's growth.

Meta conference call: AI significantly increases user activity; capital expenditure will continue to "surge" next year, focusing on both talent and computing power; AI glasses are a trend. This quarter, Meta's AI technology has amplified the economic benefits of advertising and improved user activity and platform content quality through optimizing recommendation systems, becoming a major engine for overall business growth. Zuckerberg stated that Meta now has all the conditions to achieve "super intelligence," and 2026 will be a year of "equally significant" growth in capital expenditure.

Zuckerberg's letter implies abandoning the open-source route and joining the close AI ranks, aiming to build personal super intelligence in the next 10 years. "Super intelligence will bring new security concerns. We need to mitigate these risks rigorously and be cautious about what we choose to open-source. Meta firmly advocates building personal super intelligence that can empower everyone," Zuckerberg wrote in the letter. Last year, Zuckerberg was still talking a lot about open-source AI, but in just one year, the tone has changed, and Meta seems to be joining the close AI ranks.

### Industries/Concepts

1. **Heat dissipation materials**: Guotou Securities pointed out that the heat dissipation module industry is showing a trend of continuous expansion in scale relying on technological iteration and the continuous expansion of application scenarios. In terms of passive heat dissipation, VC (Vapor Chamber) has significant potential in high-density integration scenarios. In terms of active heat dissipation, liquid cooling is expected to solve heat dissipation dilemmas.

2. **Optics**: According to a research report by Founder Securities, cameras are the "visual center" of intelligent terminal devices. Currently, continuous innovations in mobile phone optics, accelerated penetration of high-level intelligent driving in automobiles, and high growth in shipments of intelligent imaging equipment are expected to drive the continuous growth of market demand for the optical industry chain.

3. **Data centers**: The further popularization of AI applications has driven a new wave of data center construction. It is expected that from 2024 to 2027, driven by the construction of AI data centers, the 3-year CAGR of the overall power of newly added domestic data centers will be 37.0%, bringing investment opportunities for supporting equipment such as liquid cooling, HVDC, and server power supplies.

4. **AI applications**: OpenAI is expected to officially release the new GPT-5 model in early August, which is expected to once again drive the accelerated development of AI programming. Many domestic and foreign technology giants have launched AI programming-related products, and AI programming has now become one of the first core applications of AI to be implemented.

### Preview of Today's Key News

- China's Caixin Manufacturing PMI for July.

- U.S. non-farm payrolls for July.

- Final manufacturing PMI for July in the U.S., Eurozone, UK, and Japan.

- Eurozone CPI for July.

- U.S. University of Michigan consumer sentiment and inflation expectations for July.

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