Market Interpretation July 6 (The bottom is not far away)

I. [Today's News]:

1. The Kyber NVL144 rack architecture may be delayed until 2028; the alternative "NVL72x2 back-to-back" architecture may be canceled due to cloud provider deployment and operational concerns; the Rubin Ultra four-compute-die version may be canceled, with only the dual-compute-die version retained; the short-term overall impact on AI hardware is not significant. Since GB300, VR200 has also been experiencing delivery delays, but the impact on long-term growth logic is increasing; start to be wary of hardware peaking in the second half of 2027.

2. Federal Reserve Governor Milan gave a speech, stating that inflation is moving in the right direction; given policy lags, monetary policy should be forward-looking; the Fed has not yet initiated a new round of quantitative easing. The Fed's neutral remarks stabilized market liquidity expectations, with no tightening signals, which is positive for risk assets; beneficial for tech stocks.

3. US President Donald Trump announced an agreement with nine pharmaceutical companies to lower drug prices for some Americans in exchange for a three-year tariff grace period, with further negotiations on price reductions with insurance companies to follow. The drug price reduction policy will suppress the healthcare sector in the short term, while the tariff grace period benefits related import companies.

4. Oracle's stock price surged due to news related to the TikTok US business deal.

5. MSTR conducted a secondary stock offering, with a sharp pre-market decline, and the stock price fell below 90; avoid anything related to the big coin in 2026.

II. Market Interpretation (Bottom is Not Far)

1. The major non-farm payroll data on Thursday, July 2nd, was far below expectations. On June 5th, due to the World Cup, employment numbers were high, and institutions speculated on rate hikes. As the World Cup nears its end, employment data is starting to be revised downward; the possibility of speculation about rate hikes is almost zero.

2. Last week, institutions speculated on Meta forming a data center leasing division; AI hardware fell sharply, with the biggest declines in previously hyped, very expensive valuations for storage, AI semiconductor equipment, and optical communication sectors. M7 valuations are not too expensive either. The bottom is not far; opportunities to build positions on dips in June-July; the mid-term uptrend should start by the end of July at the latest.

III. Institutional Research Reports:

1. Copper Foil Industry: Soochow Securities, AI drives high-end electronic copper foil volume and price increases, lithium battery supply-demand reversal profit turning point has appeared; June 10th report, maintains Overweight rating, focus on: Defu Technology, Jiayuan Technology, Tongguan Copper Foil, Zhongyi Technology, Nuode Shares, Hailiang Shares.

2. Glass Substrate Industry: East Money Securities, a new round of price hikes for electronic cloth may accelerate, Kibing Group plans a private placement to layout glass substrates, June 29th report, recommends: China Jushi, Changhai Shares, Sinoma Science & Technology; focus on: International Composite Materials, Honghe Technology; recommends: Kibing Group, Huaxin Cement, Conch Cement.

3. Memory Test Equipment: Soochow Securities, AI computing power spawns HBM driving test equipment demand, domestic equipment manufacturers accelerate breakthroughs; July 2nd report, recommends, Changchuan Technology, Jingzhida, Lianxun Instrument.

4. Ceramic Substrate and Shell Industry: Guosen Securities, AI optical interconnect prosperity rising, pay attention to ceramic substrates and shells, July 2nd report, maintains Overweight rating, recommends, Zhongci Electronics, Xuguang Electronics, Guoci Materials.

IV. [This Week's Personal Operations]:

This Week's Plan: No operations on Monday, focus on NVIDIA, Microsoft, Broadcom, Google, TSMC, Amazon, Meta; second-tier semiconductors; if the pullback continues, consider getting on QQQ.

V. [Individual Stock Research]

[Computing Power Chip Related]: AVGO (preferred, although valuation is expensive, but ASIC chips and switch chips have fast growth in 2027), NVDA,  June Focus

[Computing Power Rental, Token Factory]: CRWV, significant pullback, no position adding;

[Cloud Services & AI Application]: SNOW, NOW, MDB, RDDT got on in May, hold for gains;

[Cybersecurity]: CRWD, PANW valuations too expensive; NET got on in April/May, hold for gains;

[Second-tier Semiconductors]: June Focus

[High-Speed Data Connection]: ANET (to be added), Nokia already on board; ANET\CRDO\AAOI\ALAB: valuations generally too expensive, wait for pullback.

[AI Infrastructure Related]: June Focus, CEG: nuclear power leader, secondary listing short-term negative; VST: natural gas, nuclear power concept; GEV: power equipment leader; valuations not too expensive;

[Hong Kong Stocks & China Concepts] Will not participate in China concepts later; 

SMIC: Hong Kong stock. The only one I would buy. Around 70/65/60/55/50, entered the watchlist.

VI. Q&A Chain 7.6:

1. Continue to hold Oracle, any position adding?

A: Have been holding Oracle all along, added positions in June;

2. Can Hong Kong stocks, China concepts bottom fish? Recently rebounding.

A: Not recommended, the only Hong Kong stock that can be bought is SMIC, wait for a pullback; many people asked if Xiaomi at 30 could be bought? I suggest below 20.

3. Can Microsoft, Meta, Amazon be bought, or positions added?

A: Microsoft is currently undervalued among M7, can add positions on dips when it pulls back; Meta, Amazon wait for pullback, valuations are relatively expensive.

4. What's your view on AAOI? What about optical communication?

A: AAOI's earnings growth rate will explode in 2027, pulled back from a high of 233 to over 120, close to 50%, risk is not significant now; very optimistic about optical communication overall, one of the main themes in 2027.