On February 25, a noticeable downturn took place in the stock market as all three major indices experienced a significant dip during the closing hours, with over 3,700 stocks plummeting across the board. The day's trading saw an overall transaction volume of 1.925 trillion yuan, reflecting a sharp decrease of 189.9 billion yuan compared to the previous trading day. Within industry sectors, notable gains were observed in areas such as Huawei mobile phones, lithography machines, complete automobiles, and flying cars. By the end of the trading session, the Shanghai Composite Index fell by 0.8%, the Shenzhen Component Index dropped by 1.17%, while the ChiNext Index saw a decline of 1.13%.

As the market approached the closing bell, numerous stocks related to computational power faced a massive sell-off. Companies such as Zhejiang Shuju Culture, Tuwei Information, and Hangjin Technology hit their daily trading limit, showcasing a collapse in value, while other firms like Runjian and Litong Electronics experienced losses exceeding 5%.

Recently, the announcement that Microsoft would be closing two of its data centers has sparked a flurry of speculation and discussion in the market. In response to rising skepticism, Microsoft reiterated its commitment to an impressive capital expenditure plan exceeding $80 billion; however, it did acknowledge that strategic adjustments might take place in certain sectors. Furthermore, tech stocks on U.S. markets took a collective hit last night, compounding concerns about the sector's future.

Industry analysts predict a continuing surge in demand for computational power moving forward. The latest earnings reports from technology giants like Microsoft, Amazon, Google, and Meta revealed a substantial year-on-year increase in capital expenditure, primarily aimed at bolstering infrastructure for cloud computing and artificial intelligence. This trend is mirrored domestically and internationally as companies ramp up their investment in the AI sector. With AI applications becoming increasingly mainstream, the demand for computational resources is set to rise accordingly.

Looking ahead, analysts at China Merchants Securities suggest that since late January, amidst released liquidity and the remarkable success of DeepSeek, the market has embarked on a spring offensive. Projections for March take into account the expansion of capital expenditure among major Chinese cloud computing and internet firms, alongside supportive policies in AI and robotics. As a result, it is anticipated that the momentum of the spring market will continue to gain traction in the short term. In terms of industry allocation, it involves focusing on the trajectory of the spring market's development and the recovery signs within specific sectors.

One of the standout performers was the Huawei mobile phone sector, which claimed the top spot in the growth rankings on the Tonghuashun A-share concept list for the day. DAFO Technology notably reached its upward trading limit, with FuRi Electronics, Hesheng Holdings, and Huaying Technology also hitting their maximum daily gains.

On February 24, Yu Chengdong, Huawei's Executive Director and the Chairman of the Terminal BG, as well as the Intelligent Vehicle Solutions Business Unit, shared a video via Weibo to build anticipation for an upcoming product, which he claims is designed specifically for the native HarmonyOS. In the video, Yu hinted at a product launch in March that will offer unexpected features — presenting the first phone tailored for native HarmonyOS, boasting groundbreaking advancements in hardware, software, and ecosystem development. Major partners in the ecosystem, including Tencent, ByteDance, Alibaba, and Meituan, are said to be working tirelessly to enhance application experiences.

During a HarmonyOS event last October, Yu stated that more than 1 billion devices are part of the Harmony ecosystem. Research by Counterpoint highlighted a robust growth trajectory for the Harmony operating system, with a predicted market share crossing 4% worldwide in the first quarter of 2024. In the Chinese market, buoyed by the popularity of Huawei’s flagship products, Harmony's market share soared to 17%, while Apple's iOS stood at 16%.

According to a report by Zhongtai Securities, the burgeoning eco-system of native Harmony applications is nearing maturity, heralding opportunities for numerous application developers to adapt, migrate, and innovate. In parallel, a report from AVIC Securities notes the native Harmony system may signify the dawn of a new era in intelligent connectivity, reshaping the global operating system marketplace. As the native Harmony system gains momentum and widespread adoption, ecosystem solution partners are poised on the verge of new growth opportunities.

In addition, the electric vehicle battery recycling sector witnessed a considerable resurgence today, with significant rallies in stock prices. Shengyang Co. hit its upper limit while Yuehongyuan A also achieved maximum gains during trading.

The backdrop contributing to this upward trend includes favorable policies for battery recycling that were discussed during a meeting on February 21. This meeting underscored the critical need to enhance the recycling and utilization systems for batteries from new energy vehicles, as China's electric vehicle battery stocks enter a phase of accelerated retirement.

According to Everbright Securities, the leading lithium battery recycling companies are experiencing progressive advancements in their processes, resulting in an increase in lithium recovery rates. This sector is anticipated to witness significant growth opportunities. Meanwhile, against a backdrop of stabilizing lithium prices, narrower futures and spot price differentials, along with innovative collaboration methods such as ‘turning waste into raw materials,’ are likely to enhance recovery profits. With renewed policy impetus, leading enterprises are in a favorable position to capitalize on these developments.