The market began to stabilize and recover in early August, following a significant downturn in global technology stocks during July that also affected A-shares. Meanwhile, the fundamental evolution of the AI industry has not paused, and investor interest in the technology theme remains strong. As macro uncertainties and industry changes intertwine, the difficulty of tech investing has notably increased, shifting from broad sector selection to meticulous, in-depth analysis. This evolution places higher demands on the systematic and adaptive capabilities of investment research systems. In recent years, Great Wall Fund has deepened its focus on the "Tech+" industry theme, building a dynamic capability system that covers the full cycle of technology investment.

You Guoliang, a fund manager with 15 years of securities experience and 6 years in public fund management, is a representative member of Great Wall Fund's "Tech+" research team. Unlike many growth-style managers who favor bottom-up stock picking, You Guoliang adheres to a top-down, trend-following investment approach. He has developed an iterative growth investment framework centered on "anchoring to the main theme and strictly controlling risk-reward." He recently shared his detailed analysis on the tech sector's pullback and its outlook.

Two Anchors for AI Rally: Macro Liquidity and Industrial Sentiment

The AI sector experienced significant volatility in July, causing the ChiNext Index and the Sci-Tech Innovation Composite Index to retrace over 20% from their late-June peaks. You Guoliang attributes this tech correction to an extreme shock driven by fund flows and sentiment, triggered by: first, Meta's leasing of AI computing power raised doubts about demand growth, intensifying internal disagreements within the AI sector; second, aggressive deleveraging in the South Korean market created a negative spiral of declines and stop-losses on leveraged trades; and third, renewed geopolitical tensions in the Middle East pushed oil prices higher, reigniting long-term inflation expectations and tightening trade, which weighed on global risk assets.

Looking ahead, You Guoliang notes that current AI industry profits are heavily concentrated in upstream hardware. Midstream, only a few leading large-model companies have just begun to see a path to a commercial closed loop, while downstream applications with large-scale profitability have yet to emerge. This has sparked market concerns about the industry's sustainability, leading to the recent decline. However, from a relative sentiment comparison, the AI sector still holds advantages. After the short-term crowding unwinds, a rebound is likely, leading to a wide-ranging consolidation pattern. The medium-to-long-term trend depends on two key variables: First, macro liquidity. The Fed's rate-cutting cycle hasn't fully reversed, and market fears of rate hikes due to Middle East conflicts may be overly pessimistic. As the US midterm elections approach in the second half of the year, policy goals could influence the Fed's stance, making the probability of a US rate hike this year lower than expected, which could improve liquidity expectations. Second, AI's own sentiment, which is the core factor driving market style. If AI maintains high sentiment, the market may return to AI after rotational shifts, but the upward slope is unlikely to replicate its strong Q2 performance, potentially entering a high-level consolidation phase. If AI's sentiment weakens, capital flowing out will seek new themes, as seen in recent tentative moves towards AI applications, new energy, and pharmaceuticals.

H2 Positioning: Bullish on Commercial Aerospace, Domestic Computing, Arms Trade, and Civil Aviation

Positioning for the second half of the year, You Guoliang plans to continue focusing on his core competency areas of TMT and high-end manufacturing, concentrating on undervalued, high-risk-reward segments with solid industrial logic. These include commercial aerospace, domestic computing power, arms trade, and civil aviation/commercial engines. The commercial aerospace sector has been in a correction since January, lasting about six months. You Guoliang believes the sector has now returned to the low levels seen at the start of last year's rally. Combined with key progress in domestic rocket recovery technology, it is transitioning from pure thematic speculation to an industry-driven investment phase. Its long-term value is supported by three pillars: first, it's a national strategic emerging industry with competitive implications, requiring urgent development and ongoing policy support; second, it serves as new infrastructure for communications, with future 6G network construction likely to generate massive new demand; third, there is potential demand from overseas markets, especially Belt and Road countries, offering sustained external support. However, sector divergence is expected, with only companies showing fundamental improvement and steady order execution realizing growth value.

Within the AI supply chain, You Guoliang sees domestic computing power combining both industry beta sentiment and the alpha opportunity of import substitution, with its long-term industrial trend unchanged. In the short term, factors like crowded positioning, capital diversion from large IPOs, and adjustments in US tech stocks may keep it in a high-level consolidation phase. Capital expenditure and financial data from overseas tech giants in July and August are key short-term indicators. He notes that advanced packaging is a crucial path to break through chip manufacturing bottlenecks and represents a quality sub-sector. You Guoliang also believes the arms trade, civil aviation, and commercial engine sectors offer attractive left-side entry points. He points out that arms trade stocks are currently at historically low levels, but industry demand is strong. A major public order could act as a catalyst. Events like air shows and the 100th anniversary of the military's founding provide ample room for valuation recovery. Domestic large aircraft and aero engines represent a trillion-yuan import substitution track, with 2027 being a major milestone for engine airworthiness certification, offering significant long-term value.

Framework for Navigating Volatility: Strategy-Driven Tech Investment Rules

Facing high volatility in the tech sector, You Guoliang emphasizes the need for a strategy-driven research and analysis framework for the long term. In stock selection for cutting-edge and early-stage emerging tracks, he argues against relying solely on traditional financial metrics. Instead, the focus should be on industry positioning and scarcity, prioritizing targets with large growth potential, leading market positions, and unique barriers, especially those at the "0 to 1" breakthrough stage. He focuses on industrial logic and scarcity in the early stage, then incorporates quantitative data for cross-verification once earnings materialize. For portfolio management, he has established specific position-building and risk-control rules: insist on buying at low levels to control risk from the cost side; screen for stocks with solid long-term logic to use industrial growth value as a hedge against price volatility; and dynamically rebalance when positions become too high, seeking a balance between excess returns and drawdown risk. You Guoliang concludes that tech investing requires both foresight into industrial trends and a deep understanding of market rules. It involves following the consensus but also trusting common sense in extremes. Great Wall Fund's "Tech+" team aims to use a panoramic view to set direction, grasp the rhythm with an industry chain mindset, and continuously iterate its "tech investment map" to provide investors with reliable long-term value in a complex environment.