When will tech stocks bottom out? The current correction in the tech bull market has persisted for some time, with leading stocks experiencing significant declines. Investors are now focused on how long this correction will last and how deep it might go.

Looking back at history, the rise of mobile internet from 2013 to 2015 fueled a tech bull market (referred to as the "Internet Bull"), while the 2019–2021 period saw a sector-driven bull market led by new energy and semiconductors (referred to as the "Sector Bull"). Both cycles underwent similar correction phases.

This article analyzes these two historical bull market corrections in the A-share market to provide insights for the current situation.

**Historical Lessons: Gauging the Current Tech Correction** During the Internet Bull, the ChiNext Index underwent a major correction from February 25 to May 19, 2014, with a maximum drawdown of 22.95%, bottoming after 57 trading days.

In the Sector Bull, the ChiNext Index experienced three significant corrections: - The first occurred from April 8 to June 10, 2019, with a drawdown exceeding 21%. - The second took place from February 26 to March 23, 2020, with a maximum drawdown of nearly 21%. - The third happened between February and March 2021, with a drawdown exceeding 25%.

Notably, corrections during the Sector Bull were faster, especially in 2020–2021, typically completing within fewer than 30 trading days.

**Current Correction Status** - The ChiNext Index has corrected for 17 trading days, with a drawdown of 12.36%. - The STAR 50 Index has corrected for 31 trading days, with a drawdown of 19.28%.

**Institutional Views on Bottom Signals** Statistics suggest that the current correction in major tech indices remains relatively shallow compared to past cycles, though the STAR 50 Index’s duration and magnitude are nearing historical norms.

Huajin Securities notes that the tech sector may not have fully adjusted yet due to: 1. Mixed policy signals and weak performance in U.S. tech stocks. 2. Incomplete sentiment and capital adjustments: - The TMT sector’s turnover rate percentile has only dropped to 59.2% since the August 27 correction. - TMT trading volume has fallen by 16.2 percentage points, indicating substantial adjustment. - Margin financing in TMT continues to flow in, lacking significant outflows.

The firm highlights that a tech bottom requires: - Positive policy and industry catalysts. - Adequate adjustments in sentiment and capital indicators: - TMT turnover rates typically fall below 30% at bottoms. - TMT trading volume share usually drops by 10 percentage points. - TMT margin balances often decline by ~10%. - Valuation levels offer limited guidance on correction completeness.

Datong Securities, however, remains optimistic about the dual-innovation (ChiNext and STAR) sector, citing strong earnings, upcoming product price hikes, and vast import substitution potential. A sustained market recovery will depend on multi-sector coordination.

**High-Growth + High-Drawdown + High-ROE Tech Stocks** Data shows the STAR 50 Index’s robust growth prospects: - Consensus forecasts project 2025–2027 revenue growth at 7.66%, 18.71%, and 17.49%, respectively. - Net profit growth is estimated at 45.79%, 80.93%, and 32.08%.

For the ChiNext Index: - Revenue growth is forecast at 24.54%, 18.50%, and 16.51% for 2025–2027. - Net profit growth is projected at 36.24%, 30.94%, and 22.48%.

Valuations remain reasonable, with the STAR 50’s forward P/E at 52.68x (2026 earnings) and below 40x (2027 earnings).

**Top Picks** Screened from DataBar, 21 stocks meet the following criteria: - Rated by ≥10 institutions with 30%+ net profit growth forecasts for the next two years. - Prices have retreated >20% from yearly highs. - Q3 ROE exceeds 8%.

Notably, 14 of these firms have 2024 R&D expenditures exceeding ¥1 billion, with Hygon Information, Shennan Circuits, Shengyi Technology, and Cambricon-U surpassing ¥10 billion.

**Standouts:** - **Profitability:** Victory Giant Technology leads with a 27% ROE (Q3). Others like Sicc, Cambricon-U, and Insta360 boast ROEs above 15%. - **Growth:** Cambricon-U, Huafeng Technology, and T&S Communications are projected to deliver >40% net profit growth in the next two years.