During trading on August 10, AI-related stocks continued to weaken, with the GEM Artificial Intelligence Index falling nearly 4%. Zhongji Innolight led the decline, dropping nearly 9%, while Eoptolink Technology fell over 7%. Other stocks such as Wangsu Science & Technology, Beijing Jingzheng, and Tianfu Communication also declined by more than 5%. In the popular ETF space, the GEM AI ETF (159363), which is the largest of its kind, saw its price drop over 3% on the exchange, potentially presenting an opportunity for investors to buy on the dip.
Recently, the global AI sector has been experiencing volatility due to concerns about the sustainability of AI infrastructure investment and high valuations. Semiconductor and other concept stocks have corrected significantly from their highs. Goldman Sachs' Chief China Equity Strategist, Liu Jinjin, stated that there is no systemic bubble in China's AI sector and that the recent corrections have brought valuations back to healthy levels. He noted that the market capitalization of China's AI companies has not yet fully reflected the economic dividends brought by the technology. The localised overheating seen in June has subsided, and valuations are now more balanced with earnings expectations. Currently, Chinese AI companies account for 11% of global market capitalization, but foreign capital allocation is only about 1%, indicating a significant underweight position.
Goldman Sachs is bullish on three key sub-sectors: the power supply chain, hardware infrastructure (including PCB, optical modules, and data centers), and physical AI (such as industrial intelligence and humanoid robots). These areas are expected to benefit from AI computing power infrastructure build-out, earnings certainty, and the advantages of the manufacturing ecosystem, respectively. Additionally, Liu Jinjin believes that the extremely low token cost of China's large language models is accelerating the commercialisation of AI applications and could drive AI tokens to become a new export growth point, reshaping the trade landscape.
On the main AI trading theme, besides computing power-positioning sectors like optical modules, significant attention should also be paid to AI applications. Following the lead of US SaaS benchmarks, such as Palantir's strong quarterly earnings beat, the market is awarding a high premium to companies that can successfully implement AI applications. The GEM AI index, which aggregates many "software + hardware" combination stocks (e.g., industry-specific vertical applications), stands to benefit more than pure hardware communication companies from the dual logic of application-layer earnings performance and a valuation system reset. The GEM AI ETF (159363) and its off-exchange feeder funds (Class A: 023407, Class C: 023408) focus on optical module CPO leaders while also incorporating AI applications. The underlying index has a combined weighting of approximately 40% for Zhongji Innolight, Eoptolink Technology, and Tianfu Communication, making it a core play on AI computing power. Furthermore, the GEM AI ETF (159363) has a total asset size of over 7.3 billion yuan and an average daily trading volume of over 1 billion yuan in the past six months, leading the eight ETFs tracking the same index in terms of scale and liquidity. Data source: Shanghai and Shenzhen Stock Exchanges, etc.
Fee Description for ETFs: When investors subscribe for or redeem fund shares, the subscription redemption agent may charge a commission of up to 0.5%. On-exchange trading fees are subject to the actual charges by the securities company, and no sales service fee is charged. Fee Description for Feeder Funds: The GEM AI ETF Feeder Fund Class C does not charge a subscription fee; the redemption fee is 1.5% for holdings within 7 days and 0% for holdings of 7 days or more; the sales service fee is 0.3%. The GEM AI ETF Feeder Fund Class A charges a subscription fee of 1% for amounts under 1 million yuan, 0.6% for amounts between 1 million yuan (inclusive) and 2 million yuan, and 1,000 yuan per transaction for amounts of 2 million yuan (inclusive) or more; the redemption fee is 1.5% for holdings within 7 days and 0% for holdings of 7 days or more; no sales service fee is charged. Risk Warning: The GEM AI ETF passively tracks the GEM Artificial Intelligence Index. The index base date is 2018.12.28, and the release date is 2024.7.11. The index's annual returns for 2021-2025 were 17.57%, -34.52%, 47.83%, 38.44%, and 106.35%, respectively. The index's annualised volatility during the same period was 23.73%, 27.34%, 38.02%, 45.42%, and 41.1%. The index's constituent stocks are adjusted according to its compilation rules. The historical backtest performance does not predict future index performance. The index constituent stocks mentioned in the article are for display purposes only. Descriptions of individual stocks do not constitute investment advice of any kind and do not represent the holdings or trading intentions of any fund under the management of the company. According to the fund manager's assessment, the risk level of the GEM AI ETF is R4-Medium to High Risk, suitable for aggressive (C4) and above investors. The suitability matching opinion is subject to the sales institution. Any information (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, any form of representation, etc.) appearing in this article is for reference only. Investors must be responsible for their own investment decisions. Furthermore, any views, analyses, and forecasts in this article do not constitute investment advice of any form to readers, and the company is not liable for any direct or indirect losses arising from the use of the content of this article. Fund investment is risky. 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 the fund's performance. Fund investment should be conducted with caution. MACD golden cross signal forming, these stocks are performing well!
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