The semiconductor sector, which had recently been mired in a bear market, saw a significant technical rebound today.
On Monday, U.S. semiconductor stocks experienced a technical bounce, with SanDisk rising 2.67%, and Micron and Broadcom gaining close to 2%.
Asian-Pacific equity markets rallied broadly on Tuesday, with the MSCI Asia Pacific Index climbing 2% to 265.96 points, ending a four-day losing streak.
The chip sector was the primary driver of this rebound. Samsung Electronics surged nearly 7% and SK Hynix gained about 5%, fueling a 4% expansion in South Korea's KOSPI index. The surge was so intense that the Korea Exchange triggered a Sidecar mechanism, temporarily halting programmatic buy orders.
With Japanese markets closed on Monday, the Nikkei 225 index played catch-up on Tuesday, rising 2.2%, while Kioxia saw gains exceeding 10% at one point.
Propelled by the surge across the chip supply chain, China's ChiNext index soared 7%, and the STAR 50 index staged a dramatic reversal from an early loss of over 3% to a surge exceeding 10%.
Morgan Stanley argues that several bearish factors worrying the market were foreseeable a month ago and do not constitute new risks, while supply-demand tightness in the data center segment shows no signs of easing. The firm maintains a positive view on the memory sector, characterizing the recent pullback as an attractive buying window.
Goldman Sachs, meanwhile, advises investors to look beyond AI-related trades and focus on three alternative themes: consumer experience stocks, compound growth companies, and potential M&A targets, to diversify away from AI volatility and capture new market opportunities.
Earnings Season Kicks Off, Putting the AI Narrative to the Test
Behind the market rebound, investor focus is shifting to the U.S. tech earnings season starting this week.
Tesla and Alphabet will report on Wednesday, kicking off the earnings disclosures for major tech firms, with Microsoft, Meta, Apple, and Amazon following in the subsequent week.
The central question for the market is whether these companies can justify their massive investments in AI with concrete financial performance.
Ikuo Mitsui, a fund manager at Aizawa Securities, noted, "The market has undergone a significant correction, but at the same time, corporate earnings have been relatively solid, showing more resilience than expected."
A team of strategists led by Jean Boivin at the BlackRock Investment Institute wrote in a recent report, "The AI investment boom—as a key driver of growth—and our preference for AI infrastructure, remain intact amid the recent volatility."
Morgan Stanley: The Memory Sell-off is a Golden Opportunity, Buy the Dip
The Philadelphia Semiconductor Index (SOX) has fallen more than 20% from its intraday high reached roughly a month ago, officially entering bear market territory.
However, in a research report dated July 20, Morgan Stanley analyst Joseph Moore and his team confirmed, following intensive visits to data center procurement channels last week, that there are no signs of easing in the intensity of the memory shortage.
Key concerns recently weighing on memory stocks—a slowdown in the second derivative of growth, rising capital expenditures, and customer de-speccing—were all "known cards" that could have been anticipated a month ago and do not represent new fundamental changes.
Morgan Stanley estimates that third-quarter data center memory prices are rising at least 25% sequentially compared to similar second-quarter products, exceeding the firm's own and third-party prior forecasts.
The firm points out that the core logic of this memory cycle is that memory is increasingly becoming a primary bottleneck in AI infrastructure build-out, a structural constraint expected to last for years.
The current market debate should shift from "how high peak profits will be" to "how long high profits can be sustained," with the latter being more significant for valuation support.
In this context, Morgan Stanley believes the risk-reward profile for memory stocks is rapidly catching up to previously favored names like Nvidia and Broadcom, and the current sell-off has created a strong entry opportunity.
Goldman Sachs Quietly Shifts Focus to Three Alternative Investment Themes
The bear market signal from the Philadelphia Semiconductor Index marks a phase of testing for the AI narrative that has dominated markets for the past two years, prompting some capital to actively seek diversification.
According to a MarketWatch report, an analyst team at Goldman Sachs noted in a research report last Friday that the "painful volatility" in AI infrastructure stocks is prompting investors to look beyond the AI theme.
An analyst team led by Ben Snider at Goldman Sachs thus proposed three alternative directions: consumer experience stocks, compound growth companies (Compounders), and potential M&A targets.
These three asset categories each emphasize different aspects of valuation, growth logic, and risk characteristics, collectively forming Goldman's non-AI investment framework for the current market environment.
The timing aligns closely with a subtle shift in market sentiment, offering investors a practical rebalancing strategy amid heightened volatility in AI-related trades.
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