The AI sector staged a strong comeback on Friday, July 31, with the ChiNext AI index posting significant gains. Optical module leaders rebounded collectively, with Tianfu Communication and New E-Pack closing up nearly 7%, while Zhongji Innolight rose over 4%. AI applications saw a wave of daily limit-up surges, with Chinese Online, Kunlun Tech, Easy Click Worldwide, and BlueFocus all hitting the 20% daily limit. Computing power leasing also strengthened, with Wangsu Technology surging over 17% and Xiechuang Data rising over 15%.
On the ETF front, the highly popular ChiNext AI ETF Huabao (159363), which holds a heavy position in optical module leaders, jumped sharply in intraday trading, closing up 7.55% and reclaiming its 250-day and 5-day moving averages. From a technical indicator perspective, this could signal a strengthening convergence of short-term and medium-to-long-term trends.
In terms of market drivers, U.S. tech giants' better-than-expected cloud computing earnings boosted sentiment, with U.S. chip stocks staging a sharp rebound overnight, and South Korean stocks leading Asian markets higher. Amazon reported strong second-quarter cloud business growth, driven by robust AI demand. The company also raised its full-year capital expenditure guidance, indicating it plans to invest more in AI, with total capital spending expected to reach $220 billion this year.
According to Galaxy Securities, global cloud vendors are continuously increasing AI infrastructure investments, driving demand growth for servers, switches, and technologies like CPO and high-speed optical modules. As AI training and inference scale up, data center internal network architectures are being upgraded. High-speed optical modules, as a key component of AI data center interconnections, are expected to benefit from the expansion of AI capital expenditures. Meanwhile, as CPO technology matures, the supply chain will further extend to optical chips, optical engines, and advanced packaging segments.
The AI application sector has also seen a new "Yi Zhong Tian" trend emerge. Previously, "Yi Zhong Tian" referred to three optical module (CPO) leaders: New E-Pack, Zhongji Innolight, and Tianfu Communication, which were star performers in the AI computing infrastructure boom. Now, as AI investment focus shifts to applications, a new "Yi Zhong Tian" combination has been "discovered," including Easy Click Worldwide, Chinese Online, and Tianlong Group.
Guosheng Securities noted that the capability of domestic open-source models has made a significant leap, raising the "baseline water level" for the entire industry. They are optimistic about the acceleration of downstream application penetration and token consumption in the second half of the year. As open-source frontiers rapidly approach closed-source state-of-the-art levels, the minimum capability level available to the entire industry is significantly raised. Downstream application developers can now access near-cutting-edge capabilities at lower costs. The firm recommends focusing on application/agent chains with real-world scenarios, data barriers, and engineering capabilities.
The ChiNext AI ETF Huabao (159363) and its OTC feeder funds (Class A: 023407, Class C: 023408) focus on CPO optical module leaders. The target index has a combined weight of approximately 40% for Zhongji Innolight, New E-Pack, and Tianfu Communication, positioning it as a core AI computing flag bearer. Additionally, the ETF has a market size exceeding 6.3 billion yuan, with an average daily trading volume of over 1 billion yuan in the past six months, leading the eight ETFs tracking the same index in size and liquidity.
Data sources: Shanghai and Shenzhen stock exchanges, etc. For reference sources of institutional views: Galaxy Securities' "Overseas Computing Power New Fiscal Quarter Begins, Optical Communication High Prosperity Reaffirmed"; Guosheng Securities' "Open-Source Models Raise AI Model 'Baseline Water Level,' Bullish on Application Penetration."