Huatai Securities uses 36 A- and H-rated companies in the communications industry as samples and estimates that the total net profit attributable to the parent company of the communications sector in the first quarter of 2025 will increase by 9% year-on-year. After excluding the three major operators, ZTE and other heavyweight stocks, the net profit attributable to the parent company of the sector is expected to increase by 49% year-on-year. In terms of subdivision, the profits of telecom operators have grown steadily; the leading manufacturers in the optical communications sector have benefited from the increased investment in AI computing power, and their performance is expected to continue to be realized under the high growth of 400G & 800G demand. In addition, the prosperity of the industrial chain is showing a trend of diffusion; IDC has ushered in a turning point due to the growth in demand for intelligent computing centers at home and abroad; and the prosperity of military communications is expected to be restored. Looking ahead to the second quarter of 2025, Huatai Securities believes that the increased investment in global AI computing power is expected to drive the performance of related manufacturers in optical communications, cloud network equipment, IDC and other sectors to continue to improve; the demand for IoT modules is expected to continue to recover; and the performance of the operator sector is expected to maintain a steady growth trend.