Following July's sharp market sell-off, there is a strong rebound expectation, with overall recovery anticipated in August, according to You Guoliang, the "Tech+" fund manager at Long Wall Fund. In the near term, tech stocks, particularly those tied to AI hardware, continue to demonstrate robust fundamentals, though their main weakness lies in unfavorable chip structures. Conversely, non-AI sectors enjoy better chip positioning but lack fundamental support.

The recent turbulence in the tech sector, driven by deleveraging pressures, has sparked widespread debate, reflecting a pivotal shift in the AI narrative—from aggressive expansion focused on "who dares to spend" to a profit-driven emphasis on "who can generate returns." On the industry front, Q2 earnings from overseas tech giants reveal sustained investment in AI infrastructure, yet short-term free cash flow constraints have raised questions about the durability of capital expenditures. In the short run, consensus is still forming, and with divergent bullish and bearish views, the tech sector is experiencing a transition from valuation-driven to fundamentals-driven dynamics.

"The rebound may unfold through sector rotation as consensus gradually solidifies," You noted. He expects AI to remain a relatively favored direction in the early stages of the recovery, but differentiation could emerge after a period of gains. Following another downturn in July, the defense sector has seen sufficient correction across its various segments, offering improved chip structures. While Q2 earnings reports may exert some near-term pressure, looking ahead over a one-year horizon, the sector is poised for gradual earnings recovery and narrative reinforcement, making it a viable candidate for left-side positioning at current levels.

With risk appetite expected to marginally improve in August, the question remains whether the tech mainline can regain investor confidence and whether the window for post-correction positioning has opened. You's analysis suggests that while short-term dynamics favor AI, the defense sector's current valuation and structural setup present a compelling opportunity for patient investors.