The market shows the 80-20 differentiation again! Over 4,000 stocks close lower, while the entire AI industry chain surges [Stock Market Review]

The market experienced a day of volatile and differentiated trading, with the three major indices showing mixed changes. The yellow and white lines on the CSI Innovation Index's intraday chart diverged significantly, and most stocks declined. The total trading volume on the Shanghai and Shenzhen stock exchanges reached 1.61 trillion yuan, an increase of 153.3 billion yuan from the previous trading day. On the futures market, hot topics were mainly concentrated in the AI sector, with more stocks declining than rising, and over 4,000 stocks across the market falling. From a sector perspective, AI hardware stocks surged collectively, with Eoptolink Technology hitting the daily limit and setting a new all-time high. AI application stocks also performed actively, with Digiwin Software hitting the 20CM daily limit. On the downside, power stocks adjusted collectively, with Huayin Power hitting the daily limit. By the close, the Shanghai Composite Index fell 0.42%, the Shenzhen Component Index rose 0.56%, and the CSI Innovation Index rose 1.73%.

In terms of sectors,

the computing hardware sector once again saw a full-scale rally, with Eoptolink Technology hitting the 20CM daily limit and setting a new all-time high, and Innolight, Dongtian Micro, Shijia Photonics, TFC Communication, Shenghong Technology, and GK Light Technology all rising over 10%. On the news front, Eoptolink Technology is expected to report a net profit attributable to shareholders of between 3.7 billion yuan and 4.2 billion yuan for H1, representing a YoY increase of 328%-385%. Among this, Q2 net profit is expected to be between 2.127 billion yuan and 2.627 billion yuan, up 35.22%-67.01% MoM. In addition, Jensen Huang, founder and CEO of US-based NVIDIA, announced two important developments today in an interview with CCTV reporters: the US has approved the sale of H20 chips to China, and NVIDIA will launch the RTXpro GPU.

Since last week, AI computing hardware companies such as Industrial Union, WUS Printed Circuit, HG Technology, Accelink Technologies, Ruijie Networks, and Eoptolink Technology have successively released earnings previews, all showing rapid growth, reflecting that the high prosperity of the computing industry is continuing. Driven by this, the medium and long-term investment value still has a high degree of certainty. However, after today's surge in trading volume and sentiment, short-term volatility may intensify.

China Securities believes that the competition and iteration of large models are still ongoing, implying that computing power investment is likely to maintain a high intensity. The following sub-sectors within the computing power chain can still be monitored: 1) core targets in the North American computing power chain with sustained high earnings growth and valuations still at historically low levels; 2) companies expected to benefit from spillover demand and achieve breakthroughs in customers or market share; 3) the 1.6T optical module and CPO industry chain.

The AI application and cloud service (cloud computing) sectors also strengthened in the afternoon, with Digiwin Software, Yunding Technology, Leo Digital Marketing, and Yongyou Network hitting the daily limit, and Siyi Information, Hand Enterprise Solutions, Sunren Media, and Wondershare Technology among the top gainers.

On the news front, on July 14, the World Digital Science Academy officially released a new AI STR series standard, the "AI Agent Operational Safety Testing Standard." The standard was jointly compiled by Ant Group, Tsinghua University, China Telecom, and over 20 domestic and overseas institutions, enterprises, and universities, making it the world's first operational safety testing standard for single AI agents.

Recently, the latest report "China Edge Cloud Market Tracking Research, 2024H2" released by International Data Corporation (IDC) shows that in H2 2024, China's edge cloud market size totals 7.39 billion yuan, with a YoY growth rate of 18.6%; among which, the market sizes for edge public cloud services, edge private cloud services, and edge cloud solutions reach 37.9, 14.4, and 2.16 billion yuan, respectively.

In terms of individual stocks

From an individual stock perspective, today's short-term theme speculation remains relatively sluggish, with high-profile stocks continuing to adjust. Among the stocks that were above 3 boards yesterday, only Shangwei New Materials advanced, while the rest all declined. Meanwhile, Huayin Power, Guosheng Technology, and Sailing Medical hit the lower limit, and Jingyuntong and Xinling Electric also saw significant declines. However, it is also worth noting that some popular stocks have seen a return of funds, such as Chutianlong, a stablecoin concept stock, hitting another limit up for two consecutive days, and Yufa Development, a core real estate stock, bottoming out and rebounding, successfully sealing the board in the afternoon to achieve 5 boards in 7 days. Under the current market structure maintaining a fluctuating upward trend, there is still room for related sectors to remain active, and the strength of the recovery from high-level losses remains a key point to watch.

AI computing power heavyweights once again exploded across the board, with Xinyisheng hitting a 20CM limit up, and Shenghong Technology, Avary Holding, and Huadian Co. setting new historical highs. This gradually extended to downstream applications, cloud computing, and server directions. As a highly popular sector, it has a strong driving effect on short-term sentiment. If this momentum can be sustained, it will not only help attract more incremental funds into the market but also form a positive feedback loop for the technology and growth style, at which point one could look for potential catch-up opportunities within the tech sector.

Market Outlook Analysis

Today, the market continued to fluctuate and diverge, with mixed performance among the three major indices and a slight increase in trading volume. The full-scale breakout of the AI industry chain boosted the ChiNext Index, but the divergence between the yellow and white intraday lines remained quite evident, with over 4,000 stocks still falling by the close. Overall, as the current rebound has progressed, market divergence has gradually increased, and the amplitude of short-term fluctuations has notably risen. However, the good news is that after the index dipped during the session, the market still showed considerable resilience, and the overall fluctuating upward trend has not been disrupted. On the other hand, although the loss effect of high-level stocks has recently intensified, no true signs of a pullback have emerged in major hot topics, which continue to be active through rotation. Therefore, one can still follow the corresponding rhythm and pay attention to low-suction and ambush opportunities in some core stocks.

Market News Focus

1. Focusing on Advanced Manufacturing, Digital Economy, and More: A Large-Scale Vocational Skills Enhancement Training Initiative Is Here

According to the Ministry of Human Resources and Social Security, the country has recently deployed a large-scale vocational skills enhancement training initiative. From 2025 to the end of 2027, the country will focus on increasing the supply of skilled talents in short supply in the manufacturing and service sectors. Guided by the in-depth implementation of the "Skills Illuminate the Future" training initiative, it will extensively carry out vocational skills enhancement training. Among these efforts, subsidized training will be conducted for over 30 million person-times, targeting high-end, precision, and advanced industries, industries in urgent need, key employment groups, etc., to promote workers' employment, income growth, and job satisfaction through skills. Various regions will focus on fields such as advanced manufacturing, digital economy, low-altitude economy, transportation, agriculture and rural areas, and life services, vigorously carrying out vocational skills enhancement training tailored to different industries and sectors. Training will continue to be strengthened for key groups, including enterprise employees, college graduates, and migrant workers, to enhance their vocational skills.

2. National Bureau of Statistics (NBS): Relevant departments are formulating measures to further strengthen the standardized governance of market order

At a press conference held by the State Council Information Office on the 15th, Sheng Laiyun, Deputy Director of the NBS, stated that in response to the intensified "rat race" competition in some industries and enterprises in recent times, the Central Financial and Economic Affairs Commission held a meeting on July 1st, explicitly proposing to: advance the construction of a unified national market in depth, focus on key challenges, regulate enterprises' low-price and disorderly competition in accordance with laws and regulations, guide enterprises to improve product quality, and promote the orderly exit of backward capacity. Relevant departments are formulating measures based on the meeting's spirit to further strengthen the standardized governance of market order. These policies and measures are conducive to standardizing market order, improving market supply-demand relationships, promoting reasonable price rebounds, and also beneficial for enterprises to improve profits, enhance vitality, and thereby drive economic structural adjustment and high-quality development.