GF SEC: The second "showdown" of 2026 is imminent, with ample room for adjustment in the technology sector.

GF SEC released a research report stating that, based on the adjustment rules of the core industry cycles in the A-shares and US stocks, the adjustment space of the technology sector in the A-shares is already relatively sufficient, although the adjustment time is slightly insufficient compared to historical situations, indicating that the second "showdown" of the year is not far away. Based on current trends in the AI industry, adjustment magnitude and time, and incremental ETF funds, the firm believes that this will be the second "showdown" of the year. Looking at the industrial prosperity level, the current low penetration rate and continuous CAPEX indicate that the AI industry is still ongoing. However, objectively speaking, due to differences in supply and demand structures, technological barriers, etc., the prosperity of different parts of the AI industry is likely to differentiate, and there will be a higher demand for research granularity going forward. GF SEC's main points are as follows: The first "showdown" in 26 years was in March, as to whether to dare to increase holdings in AI under external impacts such as the US-Iran conflict, high oil prices, and rate hike expectations. At that time, the firm advised to focus on industrial prosperity rather than external variables such as the US-Iran situation, high oil prices, and inflation expectations. Because of factors like crowding, inflation rates, and the impact of these variables, the current market is a "competition of the speed of EPS upgrades and interest rate hikes." Recently, due to impacts from overseas leveraged funds, overly consistent expectations for important milestones, geopolitical conflicts, and fluctuating oil prices, the market, especially the drop in technology assets, has exceeded expectations in terms of magnitude and speed. At this point, it is more necessary to objectively and rationally evaluate the current market position and opportunities. Overall, based on current trends in the AI industry, adjustment magnitude and time, and incremental ETF funds, we believe that this will be the second "showdown" of the year. 1. Looking at the inflows of broad-based ETFs and major funds monitoring, the current situation is the second highest level since the "924" period, only second to the peak during the tariff period in April 25th. 2. Referring to experiences in China and the US, the adjustment space for the current round of technology sector is already very sufficient. Returning to the current situation, since the end of June, the decline in the start-up index has exceeded 20%, and the core pricing factor is the internal and external liquidity shocks. Based on the adjustment rules of the core industry cycles in the A-shares and US stocks, the adjustment space of the technology sector in the A-shares is already relatively sufficient, although the adjustment time is slightly insufficient compared to historical situations. Therefore, we believe that the second "showdown" of the year is not far away. 3. The last and very critical question is whether the industry cycle may reach a bubble-like peak. This is also an important premise for whether the previous stage of adjustment experience can be referenced. Prior analysis was based on the stage adjustment in an industry cycle, but if it is judged from a fundamental angle that an industry cycle has ended, then pure technical and liquidity analysis will be futile. According to a large amount of statistical experience from A-shares and US stocks, the key to judging the turning point of prosperity lies in two empirical values: [30%] & [-50%]. When the growth rate falls below [30%] or the rate of decline exceeds [-50%], the market performance significantly deteriorates. Looking back at the industrial prosperity level, the current low penetration rate and continuous CAPEX indicate that the AI industry is still ongoing. However, objectively speaking, due to differences in supply and demand structures, technological barriers, etc., the prosperity of different parts of the AI industry is likely to differentiate, and there will be a higher demand for research granularity going forward. Risk warning Geopolitical conflicts exceeding expectations leading to global inflationary pressures exceeding expectations; overseas inflation and US economic resilience leading to a faster global liquidity entering into a tightening cycle, etc.