As we enter 2025, the landscape for artificial intelligence (AI) investments is revealing a distinctly polarized environment, an evolution characterized by marked variations in market performanceThe frothy optimism surrounding AI has given way to a more nuanced reality where certain segments experience pronounced movement while others appear to falterThis disparity is starkly illustrated by the recent trading activities in AI-related stocks.
Take, for instance, the notable performance of Cambrian, a leading player in AI chip manufacturingAfter reaching an impressive peak market price of 777.77 yuan, the company, which boasts a market capitalization exceeding 300 billion yuan, is showing signs of vulnerabilityDespite positive projections regarding its earnings, Cambrian’s stock price faced a substantial decline, registering an alarming drop of 18.9% over the course of one week
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This downturn seemed to overshadow not only Cambrian but also its peers, with Haiguang Information, another company in the sector, suffering a concomitant 10.17% drop in share price.
Conversely, the stocks that were previously languishing in the market began to gain momentumFor instance, CPO optical modules, which have been experiencing a prolonged period of stagnation, surged in value recentlyOn January 16, Tianfu Communications saw a remarkable 20% price increase, marking a significant turnaroundSimilarly, other chip stocks that had previously dropped also initiated a recovery; for example, Shengbang Corecorded a 20% rise while SMIC (Semiconductor Manufacturing International Corporation) rebounded with an impressive 6.31% gain.
This recent phenomenon presents a striking contrast to the trends observed over the past six monthsSince Q3 of the previous year, Cambrian enjoyed a doubling of its stock price while many CPO optical modules remained comparatively flat
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In fact, Tianfu Communications only managed to eke out an 8.62% increase, whilst companies like Xinyi Technology and Zhongji Xuchuang faced significant declines of 8.11% and 24.51%, respectivelyFurthermore, not every stock in the chip sector emulated Cambrian’s ascent; both Shengbang and SMIC had seen substantial pullbacks of 40.03% and 25.84%, respectively, earlier on.
The fluctuations in investment capital have equally been pronouncedData from Wind indicates a substantial shift where institutional investors, particularly in the latter part of last week, directed over 2.30 billion yuan into Tianfu Communications and approximately 1.79 billion yuan into SMICConversely, Cambrian and Haiguang Information witnessed net outflows of 3.18 billion yuan and nearly 1.43 billion yuan, respectively, marking a clear trend of capital migration within the sector.
This leads us to consider the implications for investment strategies among fund managers dealing with AI asset classes
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In light of the shifting tides, several funds heavy in AI exposure have recently reported divergences between their net asset values and estimated performance, signaling potential strategic repositioningFor instance, the Wanji Quality Life A fund, managed by Mo Haibo, prominently held Cambrian and Haiguang Information as its top two assetsFollowing the dismal performances of these holdings on January 16, where Cambrian’s shares fell by 14.65% and Haiguang dropped by 9.78%, it was quite telling that the fund itself experienced a net growth of 1.93% on that same day, despite estimates predicting a decline of about 1.86%.
Such strategic alterations seem prevalent, as similar situations manifested in several other funds managed by Mo Haibo, including Wanji Value Advantage and Wanji Social ResponsibilityThese discrepancies suggest a calculated shift towards emerging stocks like Tianfu Communications and Xinyi Technology while lightening positions in overvalued stocks like Cambrian and Haiguang Information.
Another illustrative case involves the Dongfang Theme Selection fund, overseen by Zhou Siyue, which showed a relatively stable performance
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As the value of its two primary holdings—Haiguang Information and Cambrian—plummeted, the fund somehow managed a minuscule uptick of 0.12%, deviating markedly from the expected decline of 3.9% provided by Wind.
A significant player in this sphere, managed by Lei Tao, is the Debang Xinxing Value A fundThis fund had recently released its Q4 report, revealing a heavy investment in Cambrian during the previous quarter and subsequently elevating its status to the foremost holding of the fund, while simultaneously reducing its stake in Tianfu Communications outside of the top tenOn the fateful day when Cambrian saw a major slump coupled with Tianfu’s surge, the fund still posted a respectable growth of 1.32%, which was appreciably above Wind's estimate of 0.98%. Such discrepancies could indicate a deliberate recalibration of the fund's holdings in response to evolving dynamics within the AI landscape.
The underlying shifts in AI investments represent not just random market fluctuations, but rather a comprehensive reflection of industrial evolution and changes in market sentiment
Looking forward, a contingent of fund managers anticipates that the AI market will progressively expand from the realms of AI chips and optical modules to hardware innovations at the edge of the network.
As Wang Bo, a manager at Nanfang Technology Innovation Fund, noted, the previous trend exhibited pronounced differentiation within the AI domainCertain sectors benefitted from rising capital expenditures among overseas cloud service providers, while those on the application front lagged behind in consolidating substantial fundamentalsHe foresees that the next wave of AI investment will still focus on areas that reflect increasing value and expected robustness, while simultaneously casting a broader net towards AI applications—potentially yielding a rich array of investment opportunities by 2025.
Similarly, Lei Tao emphasizes that compute capabilities are increasingly vital as foundational resources across various sectors
The push from tech giants both domestically and internationally towards enhancing capital expenditures exemplifies a recognition of the importance of compute investmentEstablishments like Microsoft, Amazon, and ByteDance have notably adjusted their spending expectations, shedding light on the burgeoning demand for compute resources.
In discussing specific segments, Lei underscores that optical modules will significantly benefit from the global momentum in AI developmentsHe anticipates that with continuous advancements in computing power and burgeoning demand for AI applications, there will be new product requirements arising alongside a wave of emerging domestic suppliers across diverse segments, from CPOs to power and cooling solutions.
Moreover, Lei Zhiyong, the manager of the top-performing fund, the Morgan Stanley Digital Economy Fund, highlights the potential for a cycle of dense innovations unfolding in 2025, with keen observation directed towards emerging AI-based smart terminals, including smartphones, AR glasses, and AI-enabled headphones.
In summation, the future of AI investments is poised for substantial growth, with significant opportunities emerging on both the business and consumer fronts