UBS points out that AI investment is entering its second phase, with the beneficiaries of capital expenditures expanding from suppliers directly serving large cloud computing companies to upstream industrial equipment, materials, and component manufacturers. Europe is experiencing a new round of industrial capacity expansion opportunities, and AI infrastructure construction will drive broader supply chain investment.
UBS divides the AI industry chain into three tiers: the first tier consists of companies that directly supply products to data center developers; as AI demand continues to grow, these companies need to invest in expanding capacity, thereby creating new orders for the second tier of equipment and materials suppliers; the expansion of the second tier further drives the third tier of component suppliers. This means that the capital expenditures of large cloud computing companies may be transmitted step by step along the supply chain, forming new industrial investment demand.
UBS believes that the fundamentals of AI demand remain resilient, but financing conditions are becoming a key differentiator for corporate performance. As capacity expansion investments extend to more tiers, balance sheet strength, cash flow, and low-cost financing capabilities will affect a company's ability to absorb new demand.
Large cloud computing companies with ample cash reserves have a relative advantage, while companies relying on external financing may face higher financing costs and project execution pressures.
