According to research reports by Morgan Stanley Morgan Stanley, market analysis is supported by Taiwan's export data and US data center expenditures, cloud semiconductor industry is expected to continue to show strong growth trends, and at the same time, general servers and second-line cloud service providers (CSPs) have also shown visible upward potential.
The report pointed out that second-line cloud service providers are expected to be more powerful in the second half of 2026. Among them, Oracle's performance is particularly eye-catching. The company had capital expenditures of up to $8.5 billion in the first quarter, which surged by 269% compared to the same period in 2024, despite a slight decline of 6% compared to the previous quarter. What is even more amazing is that Oracle has achieved orders of millions or even thousands of billions of dollars.
According to Oracle, they have signed important cloud contracts with many technology giants including OpenAI, xAI, Meta, NVIDIA, and AMD. The management has also adjusted its financial year 2026 capital expenditure forecast, and is currently expected to reach about $35 billion, an increase of about $10 billion from the previous outlook, indicating that its capital investment will be very impressive. All of these data strongly suggest that second-line cloud service providers are increasingly critical in the global digital transformation and AI wave.
In terms of short-term, the demand for cloud artificial intelligence remains strong. Morgan Stanley tracks the monthly expenditure data for the US Data Center and finds that its expenditure is gradually approaching or even exceeding office expenditure. Specifically, spending at U.S. data centers grew 30% annually to $3.6 billion in July. This reflects the continued explosive growth of enterprises and organizations' demand for data storage, processing and analytical capabilities, especially in the AI application field.
In terms of supply chains, Taiwan's processor export data in August showed that despite a 6% decline compared to the previous month, it grew by 104% compared to the same period in 2024. This means that despite short-term fluctuations, the overall demand trend is still upward. Regarding the demand for the NVIDIA NVL72 racks that are highly concerned in the market, from the cloud semiconductor side, there has not been much change in the shipping schedule in 2025. In addition, in the non-US market, the demand for NVIDIA Blackwell series products is still strong, especially the B300 chips are more popular. All of these demonstrate the global and sustainability of AI computing power demand.
In addition to professional AI servers, the general server market also has a surprising upward trend. Although the current BMC (substrate management controller) products of Taiwan's Intelligence Fighter are limited by BT substrate supply, the market predicts that the BMC business of general servers will still achieve a higher annual growth rate of ten digits. Looking back, general server demand has increased significantly since the second quarter, with the main driving force coming from Cloud Service Providers (CSPs) to store server incremental orders, which is closely related to the upstream trend of NAND memory.
In addition, according to the concept of the cryptocurrency itself, the current demand is stronger, which is driven by the double driving of "pre-AI computing" and "post-AI computing". This shows that the impact of AI has expanded from direct training recommendations to a wider range of server application scenarios such as data preparation, storage and analysis. Therefore, considering the current market situation, the report reiterated its evaluation of "buy-in" investment in Xinhua and held a positive view of the overall cloud semiconductor industry. Although the current revenue of Xinhua may be subject to supply chain restrictions, we believe the company has good growth potential in 2026. In the future, Xinhuan's AST2700 products are expected to expand their market share, and AST2750 and Internet Expansion Devices will also see more development and market attractiveness.