How long can the AI rally continue? At this critical juncture in June, will the market persist in high-level volatility, or is a style rotation imminent? Faced with high volatility and significant divergence, how should investors anchor their core strategies? On June 3rd, Sina Securities held a dialogue with Lin Rongxiong, Chief Strategy Analyst at Guotou Securities, to provide investors with a forward-looking interpretation.
Lin Rongxiong believes the current AI market trend is expanding from the 'core leaders' to the 'peripheral expansion plays.' Investors should hold onto key industrial segments while actively positioning in sectors with supply-demand gaps, such as memory and AI applications.
Framework for Technology Investment Evolution
Lin categorizes the evolution of technology investment into four stages. When a blockbuster product emerges, the market should focus on the giants. When those giants initiate massive capital expenditure, the market should shift to infrastructure. Once the industrial chain forms, the market should lock onto its critical links. Finally, the focus turns to supply-demand gaps, looking upstream for price increases and downstream for volume expansion.
Taking new energy vehicles as an example, the Tesla Model S as a blockbuster spurred speculation on Tesla itself. After Tesla entered China and undertook large-scale capital expenditure, infrastructure like charging piles and grid equipment became the focus. With a mature industrial chain, key links like lithium batteries dominated the market. Ultimately, upstream lithium mines took over driven by price-increase logic, followed by downstream auto parts driven by volume-expansion logic.
Applying the Framework to the Current AI Trend
Applying this framework to the current AI industrial trend, Lin suggests that when ChatGPT emerged as a blockbuster, the market should have sought out the giants—corresponding to the 2023 rally. Subsequently, as giants undertook massive capital expenditure, computing power as infrastructure became the main theme, a stage already fully played out. With the industrial chain forming, AI chips as a key link garnered attention, with domestic representative companies including SMIC and Cambricon Technologies. The market is now entering the fourth stage—supply-demand gaps. Here, upstream price increases correspond to memory (analogous to lithium mines), while downstream volume expansion corresponds to AI applications (analogous to auto parts).
Specific Investment Strategy for the Second Half
Based on this reasoning, Lin proposes a specific AI investment strategy for the second half of the year: 'Hold the core leaders, buy the expansion plays.' The 'core leaders' refer to pivotal players in key industrial segments, such as optical modules and AI chips, which investors should hold onto. The 'expansion plays' refer to directions radiating outward from these core leaders, including second- and third-tier companies, as well as memory and AI applications within the supply-demand gap framework. He emphasizes two core principles: look upstream at price—where涨价 logic drives sectors like memory—and look downstream at volume—where放量 logic drives AI applications.
Lin stated, 'I hope investors achieve great returns this year. This technological revolution is prompting a re-evaluation of technological paradigms across society. It has arrived and will have a profound impact on all aspects of life and work. We are witnessing a technological revolution reshaping human society.'
He advises investors to use reasonable and efficient investment tools to participate in this wave of AI investment, while emphasizing, 'Judging stock prices should be based on first principles and industrial规律. The market direction is now clear. Inevitable overheating and volatility will occur during the process, but we can understand and respond to them.'
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