In the first week of February, the A-share market experienced a notable style shift, with the technology sector undergoing a significant correction. The electronics and communications industries led the declines, with the total market capitalization of the electronics sector dropping by approximately 890 billion yuan. Leading stocks saw heavy selling on high volume, severely impacting sector sentiment. Zhongji Innolight (300308.SZ) and Eoptolink (300502.SZ) both fell over 13% for the week, while Cambricon (688256.SH) plunged 17.63% in a single week, hitting its lowest share price level since late August 2025.
In stark contrast, defensive sectors such as baijiu and real estate gained against the trend. Kweichow Moutai (600519.SH) rose 8.14% during the week, and Poly Development (600048.SH) reached a new yearly high.
Market analysts suggest that with the extended Spring Festival holiday approaching, risk aversion among investors has intensified. This, combined with stretched valuations following previous gains in tech stocks, is prompting a shift from high-volatility sectors towards areas with stronger earnings certainty. This reflects a market reassessment of valuation reasonableness and a pursuit of more stable returns.
The technology sector cooled across the board, with significant capital outflows on high volume. This week saw a broad-based pullback in A-share tech stocks, accompanied by noticeably higher trading volumes, presenting a classic pattern of "falling on high volume." Wind data shows that the electronics industry's turnover reached 313.9 billion yuan this week, a yearly high, while its sector index fell 5.22%. The communications sector index dropped 6.94%. The STAR 50 Index, a key benchmark for the tech sector, fell 5.76% for the week, its largest weekly decline since November 2025, and has accumulated an 8.45% drop over the past two weeks, indicating a clear cooling in risk appetite for technology stocks.
At the individual stock level, popular tech leaders generally experienced substantial declines. AI computing hardware leaders Zhongji Innolight and Eoptolink fell 16.79% and 13.2% respectively. AI chip representative Cambricon dropped 17.3% for the week, accumulating a 30.45% decline over the past four weeks, with its share price falling to 1,036.99 yuan, a near six-month low. The memory chip supply chain faced collective pressure, with Shannon Semiconductor (300475.SZ) down 18.25% for the week. GigaDevice (603986.SH), Ingenic Semiconductor (300223.SZ), and Longsys (301308.SZ) all fell more than 12%.
The high-volume declines indicate significant loosening of holdings. Zhongji Innolight's weekly turnover surged to 125.1 billion yuan, an increase of over 27% from the previous week. Eoptolink's turnover also exceeded 100 billion yuan. In terms of pullback magnitude, the selling pressure on tech stocks is even more pronounced, with many stocks having retreated 20% to 30% from their peaks in the current bull market. Statistics show that as of the latest closing date, 219 stocks within the Shenwan electronics industry have seen drawdowns of 20% or more, accounting for 44% of the total 498 stocks in the sector.
Sixty-nine stocks have experienced drawdowns exceeding 30%, primarily from sub-sectors like memory, chip design, PCBs, and consumer electronics. Taking memory chips as an example, Shannon Semiconductor's share price surged over 300% between September 2025 and January 2026, far exceeding the company's forecasted net profit growth of 81.77% to 134.78% for the previous year. Such a divergence between share price and fundamentals is prone to trigger sharp corrections when market sentiment shifts. Meanwhile, stocks like Cambricon, Industrial Fulian, ASR Microelectronics (688220.SH), and Bestechnic (688608.SH) have seen drawdowns exceeding 35%.
Furthermore, recently listed GPU star companies MetaX (688802.SH) and Moore Threads (688795.SH) both hit new all-time lows this week. MetaX's share price reached a historical high of 895 yuan on its debut but has since retreated 44.8% to 493.88 yuan. Moore Threads has also retreated 42.9%.
The deep correction in tech stocks this round is not coincidental but results from the confluence of multiple factors. Pressures on the tech sector, relating to timing, external environment, and intrinsic valuation, are being released collectively before the Spring Festival.
Firstly, the long holiday effect has spurred a wait-and-see attitude among investors. Historically, the A-share market often experiences contracting turnover and declining risk appetite before the Spring Festival. This year's holiday period is lengthy, and overseas markets remain active during this time, increasing uncertainties. Some institutional investors are choosing to hold cash during the holiday, locking in profits by selling tech stocks that have seen substantial gains.
Secondly, elevated valuations have fueled profit-taking demand. Following sustained gains since Q4 2025, valuations in the A-share tech sector have reached historically high levels. As of the latest close, the price-to-earnings ratio for the electronics sector was 69.76 times, significantly above its five-year average, indicating substantial inherent adjustment pressure.
Thirdly, overseas disturbances are exacerbating market volatility. Zhao Xi, Investment Director at Shanghai Yinghao Asset Management, stated that internationally, the market perceives the Fed Chair as relatively hawkish, leading to strong expectations for rising US Treasury yields, particularly for medium to long-term bonds. Rising interest rates are unfavorable for tech stock valuations. Additionally, the release of the Claude Cowork plugin by AI company Anthropic has intensified market fears about traditional software business models being disrupted by AI, affecting sentiment across global tech sectors.
Fourthly, capital flows and market sentiment are reinforcing each other. Zhao Xi analyzed, "The A-share market started the year with 17 consecutive positive sessions, driving very high market sentiment and a rapid increase in margin financing. Approaching the Spring Festival, the market faces liquidity tightening, coupled with selling by margin traders concerned about funding costs before the holiday. These factors jointly contributed to the phased correction in tech stocks."
He believes A-share tech stocks could potentially rebound next week, noting that NVIDIA's CEO recently reiterated optimistic signals regarding AI development, stating that AI infrastructure construction is still in its early stages and demand will remain robust for years to come.
Regarding the impact of Anthropic's AI plugin on the A-share software industry, Zhao Xi believes China's software ecosystem is entirely different from that of the US. "Particularly in areas like cloud computing, cloud services, and AIGC for AI applications, domestic software development and application are more customized rather than standardized. We think the impact of the Claude Cowork plugin system release is not that significant. The decline driven by short-term panic has unfairly penalized core players in the A-share software and AI application industries," Zhao Xi said.
A securities analyst expressed a similar view, stating, "The market style is undergoing a phased shift. After two months of continuous gains, tech stock valuations have reached historical highs, with some individual stocks even pricing in earnings growth for the next 2-3 years. As the annual report season approaches, the tech sector is entering a phase of 'separating the wheat from the chaff'."
Capital exiting the tech sector has not left the market entirely but has clearly engaged in a "rotation from high to low," with major consumer and property sectors demonstrating resilience. The CSI Baijiu Index, which had been dormant at low levels, rose 2.24% this week. Kweichow Moutai and Wuliangye (000858.SZ) gained 8.14% and 1.9% respectively. The real estate sector was active amid expectations of policies "optimizing purchase restrictions." Beyond defensive plays like baijiu and real estate, some capital began focusing on sectors like pharmaceuticals and new energy, which have undergone substantial corrections and possess long-term growth logic. This capital reallocation process may signal a phased shift in market style.