The optical module sector experienced a sudden downturn in afternoon trading on June 11th. The ChiNext Artificial Intelligence Index, which has over 50% exposure to CPO (Co-Packaged Optics) within optical modules, fell more than 3%. Among the constituents, Eoptololink Technology Inc.,Ltd. (SHE: 300502) plunged 7%, while Zhongji Xuchuang dropped over 3%, and Tianfu Communication declined more than 1%.
Regarding popular ETFs, the leading ChiNext AI ETF by size and liquidity, Huabao (159363), saw its on-market decline widen to over 3.5%, while experiencing net subscriptions exceeding 100 million units.
On the negative news front, aside from a recent SemiAnalysis report suggesting potential changes in the CPO implementation timeline, market skepticism regarding AI earnings, capital expenditure structures, and liquidity has also intensified. The market anticipates that the tech industry may need to issue up to $1.5 trillion in new debt over the coming years to finance AI infrastructure, with free cash flow at some cloud computing platforms plummeting.
Assessing the Current Landscape
Industrial Securities commented that while the growth sector has seen recent adjustments and market chatter about a potential style shift, they believe there's no need to force a switch. The core factors remain the relative strength of sector prosperity and changes in relative performance.
• Firstly, regarding the current AI market trend, recent disturbances are essentially issues related to the denominator side—such as crowding, liquidity, and sentiment. These do not signal the end of a major industry trend cycle; instead, the resulting volatility often creates buying opportunities. As the July earnings season approaches, the verification of fundamental prosperity and industry trends on the numerator side will serve as another catalyst for the global AI theme.
• Secondly, historical analysis shows systematic style shifts in the A-share market have only occurred under two conditions: systemic policy easing or a trend-driven economic recovery. Therefore, given the current macro environment of weak domestic economic recovery and accommodative but not excessively loose monetary policy, the conditions for a systematic style shift are not yet met.
• Thirdly, recent external disturbances do not alter the underlying logic of the A-share market's focus on prosperity and profitability this year; instead, they further elevate the market's emphasis on earnings performance. Currently, technology growth represented by AI remains a sector with strong earnings certainty and sustained prosperity advantages.
• Finally, as the earnings disclosure period approaches, the effectiveness of prosperity investing increases, reinforcing the market's focus on performance. From June to the first half of July, with the interim earnings pre-disclosure period nearing, the efficacy of prosperity investing is expected to rise again.
Strategic Allocation Recommendations
In terms of allocation, Industrial Securities advises adopting a long-term perspective to navigate short-term fluctuations, continuing to hold positions in the most certain segments within the AI theme, represented by the North American computing power chain. This includes optical communication (optical modules, optical fibers & cables), PCBs, etc. Historical precedents repeatedly show that during market volatility caused by external shocks, sectors with high certainty of prosperity become the market's focus and demonstrate greater resilience. During the July earnings period, these high-consensus prosperity sectors are likely to remain the market's strongest consensus.
For a one-stop investment in leading CPO optical module companies, it is recommended to focus on the leading ChiNext AI ETF by size and liquidity, Huabao (159363), and its corresponding feeder funds (Class A 023407, Class C 023408). The underlying index has over 50% exposure to optical modules, high concentration in key players, and allocates approximately 30% to AI applications, representing not just the core of computing power but also AI application leaders.
It is noteworthy that as of June 9, 2026, Huabao ChiNext AI ETF (159363) reached a size of 7.426 billion yuan, ranking first in size within the dual-innovation (ChiNext & STAR) AI thematic space across the market! Its average daily turnover over the past six months exceeded 900 million yuan, also ranking first in trading activity within the AI thematic space.
Data source: SSE, SZSE, etc.
ETF fee note: Subscription/redemption agents may charge a commission not exceeding 0.5% of the transaction value when investors subscribe for or redeem fund units. On-market trading fees are subject to the rates charged by securities firms; no sales service fee is charged.
Feeder fund fee note: Huabao ChiNext AI ETF Feeder Fund Class C charges no subscription fee; a redemption fee of 1.5% applies for holdings under 7 days, and 0% for 7 days or more; a sales service fee of 0.3% applies. For Huabao ChiNext AI ETF Feeder Fund Class A, subscription fees are 1% for amounts below 1 million yuan, 0.6% for 1-2 million yuan, and a flat 1000 yuan per transaction for 2 million yuan or above; a redemption fee of 1.5% applies for holdings under 7 days, and 0% for 7 days or more; no sales service fee is charged.
Risk Disclosure: Huabao ChiNext AI ETF passively tracks the ChiNext Artificial Intelligence Index. The index base date is December 28, 2018, and its release date is July 11, 2024. The index's annual performance from 2021 to 2025 was 17.57%, -34.52%, 47.83%, 38.44%, and 106.35%, respectively. Index constituents are adjusted according to its compilation rules; its backtested historical performance does not indicate future results. Constituent stocks mentioned are for illustrative purposes only; individual stock descriptions are not investment advice of any form and do not represent the holdings or trading intentions of any fund managed by the manager. The fund manager assesses this fund's risk level as R4 (Medium-High Risk), suitable for Aggressive (C4) or higher risk-tolerance investors. Suitability matching opinions are subject to sales institutions. Any information appearing herein (including but not limited to stocks, commentary, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only. Investors are solely responsible for their independent investment decisions. Furthermore, any views, analyses, or forecasts herein do not constitute investment advice of any kind to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. Fund investment carries risks. Past fund performance does not guarantee future results. The performance of other funds managed by the manager does not constitute a guarantee of this fund's performance. Invest in funds with caution.
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