Friday (October 30) marked the final trading day of October for A-shares, with major indices closing lower collectively for the month, showing a pattern of declining volumes alongside falling prices. The ChiNext Index dropped over 23% during the month, the second-largest single-month decline in its history.
Among sectors, heavyweight segments such as optical modules suffered particularly steep losses. Eoptolink Technology Inc fell more than 49% for the month, Suzhou TFC Optical Communication Co Ltd declined over 23%, and Zhongji Innolight Co Ltd dropped more than 31%.
In the popular ETF space, the ChiNext Artificial Intelligence ETF Huabao (159363), which focuses on optical module leaders, saw its underlying index decline 27.99% for the month, setting a new July record for losses and hitting a new low for the year. Investor interest in buying the dip remained notably high.
The ChiNext Artificial Intelligence ETF Huabao (159363) underlying index's performance this year is worth reviewing: what exactly is the market worried about? The trigger for this sharp sell-off centered on the late-October Q3 earnings window for the three optical module leaders. What the market traded was not year-over-year growth rates, but the expectation gap created by quarter-over-quarter data, and the disconnect between that and cloud providers' still-accelerating Capex.
For investors watching optical modules, this kind of adjustment — driven by "timing misalignment" rather than "demand reversal" — actually offers an observation window for buying on dips.
Q3 Reports: Sequential Divergence, Not Demand Reversal
In the first three quarters, the three optical module leaders still posted strong year-over-year growth, but Q3 quarter-over-quarter data showed key divergence: Zhongji Innolight Co Ltd reported Q3 revenue of 10.216 billion yuan, up 25.89% quarter-over-quarter, with net profit attributable to shareholders of 3.137 billion yuan, up 30.04% quarter-over-quarter — the smoothest delivery pace. The real expectation gap came from Eoptolink Technology Inc and Suzhou TFC Optical Communication Co Ltd — Eoptolink Technology Inc posted Q3 revenue of 6.068 billion yuan, down 4.97% quarter-over-quarter, breaking its previous streak of consecutive sequential growth; Suzhou TFC Optical Communication Co Ltd reported Q3 revenue of 1.463 billion yuan, down 3.23% quarter-over-quarter.
The logic behind the sell-off is not complicated: leading companies' valuations had previously implied a linear extrapolation of continued quarter-over-quarter acceleration. Once sequential growth flatlined or slightly declined, even if year-over-year still doubled, it would be collectively priced as "the growth peak has passed."
But both companies' sequential weakness was not demand-driven: Eoptolink Technology Inc's decline stemmed from a mismatch between customer pickup timing and revenue recognition, possibly an "occasional impact from individual customers," with Q4 already recovering and Q3 net margin of 39.3% actually hitting a new single-quarter high; Suzhou TFC Optical Communication Co Ltd was dragged by shortages of materials such as EML, compounded by a 238.76% year-over-year surge in asset impairment.
Zhongji Innolight Co Ltd's sequential acceleration actually proves the opposite: demand has not turned, and the gap in delivery capabilities among leaders was amplified in Q3.
It is worth noting that the Q3 sequential divergence did not ferment in isolation: in October, the U.S. AI supply chain weakened in tandem, the Philadelphia Semiconductor Index plunged multiple times, and overseas rumors of optical module restrictions added disturbance — cross-market sentiment amplified the decline in A-share optical modules. Overseas factors may have acted as a decline amplifier.
Demand Anchor: Capex Support and "Delivery Assurance"
Cloud providers' Capex (capital expenditure) is the "demand anchor" for optical module prosperity, locking in the lower bound of demand.
The volume anchor: the four major U.S. tech giants have updated their 2026 capital expenditure expectations during the Q3 earnings window, with the combined upper limit potentially exceeding $740 billion; their actual total capital expenditure in 2025 was $455.8 billion — based on the upper end of guidance, that is nearly $300 billion more in a single year, an increase of over 60%. As long as total Capex does not contract, the demand pie for optical modules will not shrink.
The structural anchor: in AI clusters, GPUs determine how strong computing power is, while optical modules determine whether computing power can be connected. The larger the cluster and the higher the speed, the more optical interconnect usage and unit prices rise in tandem: from 400G to 800G to 1.6T, per-module value is increasing, and per-rack usage is also rising. Optical modules' share of Capex structurally rises with scale expansion and speed upgrades — every increment in Capex translates to more than a one-unit increment for optical modules.
The timing anchor: optical modules follow a model of "order placed, production scheduled; delivered, revenue recognized," with delivery cycles far shorter than heavy-asset segments like IDCs and power. Capex changes show up on their financial statements first. This also explains why Q3 sequential fluctuations triggered such violent pricing — optical modules are the most sensitive "thermometer" for Capex; and Capex is still accelerating, which is the most direct rebuttal to "growth peak" concerns.
Buying on Dips: A High-"Optical" ETF Tool
In summary, the aforementioned Q3 sequential divergence points more to delivery timing misalignment and material constraints rather than demand reversal; the cloud providers' Capex "demand anchor" has not loosened, and industry progress in 1.6T/silicon photonics remains unchanged. After the sharp decline, an expectation gap has formed between valuation clearing and unchanged demand, which actually offers an observation window for buying on dips.
To capture optical module leaders plus AI applications, investors may consider the ChiNext Artificial Intelligence ETF Huabao (159363) and its off-exchange feeder funds (Class A 023407, Class C 023408), which focus on optical module CPO leaders while also covering AI applications. The underlying index has over 35% weight in "Zhongji Innolight Co Ltd + Eoptolink Technology Inc + Suzhou TFC Optical Communication Co Ltd," making it a core standard-bearer for AI computing power.
Data source: Shanghai and Shenzhen stock exchanges, Wind, etc. Note: As of September 30, 2026, according to the Guozheng Index, the top three constituents of the ChiNext Artificial Intelligence Index are Eoptolink Technology Inc (12.98% weight), Zhongji Innolight Co Ltd (12.09% weight), and Suzhou TFC Optical Communication Co Ltd (10.8% weight). Reminder: Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors should invest rationally based on their own financial conditions and risk tolerance, paying close attention to position and risk management.
ETF fee disclosure: When investors subscribe or redeem fund shares, the subscription/redemption agent may charge a commission of no more than 0.5%. On-exchange trading fees are subject to actual charges by securities companies; no sales service fee is charged. Feeder fund fee disclosure: Huabao ChiNext Artificial Intelligence ETF Initiating Feeder Fund C does not charge subscription fees; redemption fees are 1.5% within 7 days and 0% after 7 days (inclusive); the sales service fee is 0.3%. Huabao ChiNext Artificial Intelligence ETF Initiating Feeder Fund A charges a subscription fee of 1% for amounts under 1 million yuan, 0.6% for 1 million yuan (inclusive) to 2 million yuan, and 1,000 yuan per transaction for amounts of 2 million yuan (inclusive) and above; redemption fees are 1.5% within 7 days and 0% after 7 days (inclusive); no sales service fee is charged.
According to the fund manager's assessment, the risk levels of ChiNext Artificial Intelligence ETF Huabao, Hong Kong Stock Connect Information Technology ETF Huabao, and STAR Chip ETF Huabao are R4 — medium-high risk, suitable for aggressive (C4) and above investors. Suitability matching opinions should be based on the selling institution's assessment.
Risk disclosure: ChiNext Artificial Intelligence ETF Huabao passively tracks the ChiNext Artificial Intelligence Index. The index base date is December 28, 2018, and the launch date is July 11, 2024. The index's annual returns from 2021 to 2025 were: 17.57%, -34.52%, 47.83%, 38.44%, and 106.35%, respectively. The index's annualized volatility over the same period was 23.73%, 27.34%, 38.02%, 45.42%, and 41.1%, respectively. The index constituent composition is adjusted in a timely manner according to the index compilation rules, and its backtested historical performance does not predict the index's future performance. Index constituents mentioned in this article are for illustrative purposes only; individual stock descriptions do not constitute investment advice of any form, nor do they represent the holdings or trading actions of any fund under the manager. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only, and investors are responsible for any investment decisions they make independently. Additionally, any views, analyses, and forecasts in this article do not constitute investment advice of any form to readers, and no responsibility is accepted for direct or indirect losses arising from the use of this content. Fund investment involves risks; past performance of a fund does not represent its future performance; the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. Fund investment requires caution. MACD golden cross signals have formed; these stocks are performing well!
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