China Communications Infrastructure: Read-across from 3Q26 US CSP capex and China AI optics results

Top-4 US CSPs' 3Q26 aggregate quarterly capex of $207bn (+84% YoY) is largely in line with expectations but with significant divergence: Amazon materially exceeded Citi forecasts, while Google, Meta and Microsoft undershot by 9–14%. Aggregate capex is likely to moderate sequentially in 4Q26, largely reflecting quarterly phasing and Amazon’s outsized 3Q spending rather than weakening AI demand. Citi’s US TMT team trimmed its CY26 capex estimate by 1.5% to US$742bn but raised CY27/CY28 forecasts by 5.0%/6.0% to US$1,168bn/US$1,451bn, implying still-strong growth of 57%/24%. Management commentary across all four CSPs also points to a meaningful spending step-up in 2027. We view the softer 4Q trajectory as a potential near-term sentiment overhang for Chinese optical names, but the stronger 2027 outlook reinforces medium-term demand visibility, particularly for high-speed 800G/1.6T optics. Post 3Q26 results, 2027 demand expectation stays largely unchanged, with improving visibility to 2028