Following a roughly one-week adjustment period, the technology sector has once again seen an uptick. Among the six major tracks, three—chip semiconductors, computing power and algorithms, and robotics—have already taken the lead, initiating a wave of rebound. The strong performance of these sectors is quite pronounced, also driving rebounds in tech-heavy indices like the ChiNext and the STAR Market. The ChiNext Index rose nearly 1.65% today, while the STAR Market Composite Index also climbed close to 2%. The Shanghai Composite Index also rebounded, approaching the 4100-point mark.
Currently, the Chinese economy is in a phase of transformation. The AI technology revolution is driving the rise of the tech sector, with both orders and profits gradually materializing. Since last year, I have proposed that these six major tracks will be the main themes that take turns performing during this technology market cycle.
The First Major Track: Chip Semiconductors
This includes optical modules, CPUs, liquid cooling, PCBs, and more, representing the "shovel sellers" of the AI era—the areas with the highest demand and earliest beneficiaries. This theme has shown strong upward momentum over the past year or so, earning the moniker "the sector standing in the light." Since I first outlined the six major tracks early last year, chip semiconductors, as my most favored first track, have already experienced significant gains.
The Second Major Track: Computing Power and Algorithm Infrastructure
This represents the "water, electricity, and gas" of the AI era. All large model computations and AI technologies are inseparable from computing power. It can be said that future competition between nations will revolve around two types of power: the first is computing power, and the second is electrical power. Of course, vigorously developing computing power also relies on electricity, so power grid equipment is also part of this computing power and algorithm infrastructure.
The Third Major Track: Humanoid Robots
On June 1st, Unitree Robotics successfully passed its listing review, drawing significant market attention as the first A-share listed humanoid robot company. Humanoid robots have been a key direction I've highlighted since the end of 2024, representing one of the best real-world applications for "AI + consumption." It is also poised to become China's fourth major industrial track, following home appliances, mobile phones, and new energy vehicles. In the long term, I believe this is a long and promising track with potential for performance spanning two to three years or even longer.
In July and August, Tesla's Optimus V3 robot, under Elon Musk, is set to debut. Recent videos have shown Musk conversing with the Optimus robot quite fluently. The V3 robot helped Musk put away his bag, interacting almost like a normal person. This illustrates how robots are gradually integrating into our work and daily lives. Recently, a U.S. robotics company conducted a live stream originally planned for 8 hours of robot parcel sorting, which ended up lasting over 200 hours, sorting more than 200,000 items without a single error. It's clear that humanoid robots replacing human labor is drawing nearer, and their entry into households is accelerating. The domestic robot released by Figure Robotics demonstrates smooth performance in tasks like tidying rooms in the living room or wiping tables and smoothing bedding in the bedroom. This also counters the skepticism that humanoid robots are only for jumping and performing tricks but cannot do real work.
Of course, for investors allocating to the humanoid robot sector, the primary focus should be on leading stocks within the supply chain. Regardless of which humanoid robot companies ultimately succeed, component suppliers will benefit. In particular, leading component companies that can enter the supply chains of Tesla or Unitree are likely to see upward opportunities, as they may gradually receive orders and realize performance in the future. Currently, we are still in the early mold-making stage, with mass production not yet started, so current earnings are essentially from automotive components, not yet reflecting robot component earnings. Performance from robot components is expected to gradually materialize in the coming years.
On May 22nd, Elon Musk and owners of Model S and Model X witnessed the final vehicle rolling off the line at the California factory. The facility will later be converted into a humanoid robot production line with an annual capacity of one million units. Musk has begun gradually reducing or even phasing out Tesla's automotive production lines to focus on autonomous driving, humanoid robots, commercial spaceflight, and brain-computer interfaces. This also indicates Musk's continued confidence in these four directions for the future.
The Fourth Major Track: Commercial Spaceflight
Commercial spaceflight may need to wait for its turn later in the cycle. There isn't much performance to show yet. SpaceX is expected to go public around August or September, with a potential market capitalization reaching $1.5 trillion. This suggests that around the time of its listing, the commercial spaceflight sector could become a focal point for capital, but patience is still required for now. Commercial spaceflight can be seen as the application of AI in space.
The Fifth Major Track: Solid-State Batteries
The breakthrough in solid-state battery technology is now within reach. China plans to have 4,000 prototype vehicles fully equipped with solid-state batteries by next year, replacing current lithium-ion batteries. Current lithium-ion batteries use liquid electrolytes for conduction, which can lead to issues like short driving range, insufficient safety, and a higher risk of fire or explosion upon impact, deterring some from buying electric vehicles. If solid-state battery technology achieves a breakthrough and enters mass production, costs are expected to subsequently decrease. This could make the energy storage sector another key area to watch, following commercial spaceflight. Widespread adoption of solid-state batteries could potentially revolutionize energy storage.
The Final Track: Biotechnology
This includes brain-computer interfaces, AI healthcare, and using AI methods to develop new drugs for treating complex diseases like cancer. These areas are likely to become future focal points. Traditional generic drugs and active pharmaceutical ingredients, impacted by centralized procurement policies, face difficulties in achieving a performance turnaround. Therefore, the biotechnology referred to here mainly involves innovative drugs that integrate with AI and enjoy 20-year patent protection.
Although the current market is experiencing repeated fluctuations, I have consistently emphasized that this market cycle is likely to extend for a longer duration, with structural differentiation persisting throughout. A balanced portfolio allocation—with one hand in technological innovation and the other in HALO assets—is a sound strategy. Technological innovation represents industries empowered by the AI era, while HALO assets represent the infrastructure of the AI era. This includes non-ferrous metals, rare earths (which have recently begun a significant rebound), as well as power grid equipment, coal, and new energy sources like wind, solar, and storage, all of which stand to benefit from the AI era.
The key strategy for capturing opportunities in this market cycle is balanced allocation: one hand in technology, the other in HALO assets.
Comments