The STAR 50 and ChiNext indices have recently reached record highs, with core drivers including AI computing infrastructure, domestic semiconductor substitution, and optical communication sectors. At this juncture, questions arise regarding the sustainability of the technology stock rally, potential valuation bubbles, and which specific segments offer the most value, drawing significant market attention.
Wang Xianwei, Fund Manager of the Specialized and Sophisticated Products at Chuangjin Hexin Fund, views this rally as a structural bull market driven by the AI industrial revolution and supported by strong earnings, rather than a broad-based index bull market. He is most optimistic about investment opportunities within the AI computing industry chain. He asserts that the current tech rally is underpinned by solid industry trends and earnings support. While current valuations appear high, dynamic valuations remain reasonable. Looking ahead, he anticipates increased challenges for technology stock investments in the second half of 2026. Considering expected market volatility and divergence, he plans to increase allocations to subsectors where competitive landscapes are becoming clearer and growth momentum is accelerating, based on in-depth industry research.
1. With the recent strong performance of the STAR 50 and ChiNext indices, what is your perspective? Does this signal a new bull market phase for A-shares? Wang Xianwei: The record highs for both indices last week were driven by a confluence of industry, policy, and capital factors. Fundamentally, this rally has strong industrial trends and earnings backing. The emergence of Agent AI has commercialized the AI industry cycle, with sustained high growth in global, particularly domestic, token usage. Computing demand is surging globally. Combined capital expenditure forecasts for the world's top nine cloud providers for 2026 have been revised upward to approximately $830 billion. Domestically, a joint action plan promoting the integration of AI and energy provides a strategic national timeline and roadmap. Industry events like the preview launch of DeepSeek V4 with full adaptation to domestic computing cards have significantly boosted market confidence in AI investments. Robust industrial demand provides the firmest foundation for the tech stock rally.
Policies have also been favorable. In April, the CSRC issued guidelines to deepen ChiNext reform and better serve new quality productive forces, reshaping its market positioning. In May, the US-China summit during former President Trump's visit fostered expectations of eased trade tensions, boosting risk appetite. A series of policies, including a 1.2 trillion yuan sci-tech relending facility, have been realized in a short period.
However, new index highs do not signify the start of a comprehensive index bull market. The current market is a structural rally led by the AI industrial revolution trend and strongly supported by earnings realization, not a traditional broad-based bull market. This structure makes selecting the right sectors more critical.
2. What are the main drivers behind this technology stock rally? Wang Xianwei: The comprehensive explosion of AI industry demand and capital expenditure entering a "surge mode" form the fundamental industrial base. AI large models are transitioning from the "training era" to the "inference and application era." The exponential growth in token consumption directly translates into robust demand for computing infrastructure. Industrially, since early 2026, continuous iterations of large model capabilities, such as GPT-5.5 and Claude Mythos, have pushed performance boundaries. Simultaneously, hit applications like OpenClaw and Codex have driven exponential token growth.
In capital markets, capital expenditure is the most direct indicator. The market consensus for 2026 capital expenditure by global hyperscale cloud companies has been revised upward from $465 billion at the start of the Q3 2025 earnings season to approximately $527 billion. Capital expenditure by domestic internet giants is also accelerating.
3. After recent significant gains, technology stock valuations are relatively high. What is your view on the "technology stock bubble" theory? Wang Xianwei: Current apparent valuations for tech stocks are indeed at historical highs, a situation characteristic of specific development stages. Earnings releases for many leading tech companies are expected in the second half of this year and next year. Therefore, from a dynamic perspective, valuations for most industry leaders are at very reasonable levels. Assessing bubbles based solely on realized earnings forecasts does not align with objective logic.
Discussions of a tech bubble have accompanied the market for years. A more objective conclusion requires evaluation over a longer historical and industry cycle. Viewing only short cycles like the current quarter or month might suggest a bubble phase at every point over the past three years. However, looking back, we've witnessed AI technology evolution from ChatGPT's debut to the viral GPT-3.5 model, to the May 2025 release of the Claude 4 series, whose powerful programming capabilities advanced AI commercialization. The early-year explosion of Openclaw-like applications introduced the new paradigm of Agentic AI. These developments have repeatedly revised upward earnings expectations for AI industry chain companies, reflecting the pattern of technological revolution.
4. Among the various technology subsectors, which directions are you most optimistic about and why? Wang Xianwei: The most favored area is the AI computing industry chain, which offers the strongest earnings certainty. It benefits from a triple resonance of industry trend, earnings realization, and pricing elasticity, making it the most certain allocation direction within the tech sector. Continuously upward revisions to capital expenditure plans by the top four North American cloud providers provide the most solid fundamental support. The domestic computing power boom is imminent. The localization rate of AI chips is projected to rise from 19% in 2023 to 41% in 2025, and is expected to reach 60% in 2026. Domestic large models achieve near-overseas performance at extremely low costs, leading instead to "computing power inflation"—cost reductions stimulate accelerated demand and a surge in computing consumption. The entire domestic AI computing industry chain is poised for a prolonged period of prosperity.
5. Looking ahead to the second half of 2026, how will you adjust your technology stock investment strategy? Given the high volatility of tech stocks, how should investors manage risk? Wang Xianwei: Technology stock investing will become more challenging in the second half of the year. As AI applications enter a phase of intense competition, cost-reduction pressures upstream will gradually emerge. Consequently, volatility and divergence among tech stocks are expected to increase. Based on deep industry research, we will increase allocations to subsectors where competitive landscapes are beginning to clarify and growth momentum can still accelerate.
Regarding increased tech stock volatility, investors should place greater emphasis on position control and utilize assets like high-dividend, low-volatility stocks to hedge risks within their technology portfolios.
MACD golden cross signals have formed, with these stocks performing well.
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