Tech Growth Seen as Core Driver Despite A‑Share Volatility

The A‑share market endured a week of turbulence, with broad indices retreating as global sentiment shifted. The catalyst was the stronger‑than‑expected U.S. May nonfarm payrolls report, which lifted expectations of Federal Reserve rate hikes and triggered a sharp 4.18% drop in the Nasdaq on June 5. Brokerages argue that the pullback reflects a combination of factors: the large cumulative gains already built into technology stocks, uncertainty surrounding monetary policy at major overseas central banks, and a contraction in global risk appetite. Yet they emphasize that over a longer horizon, the market lacks the foundation for a wholesale style rotation from growth to value, and technology growth remains the dominant theme for the second half of 2026.

Analysts described the U.S. sell‑off as more emotional than structural. Industrial Securities pointed to earnings misses among leading firms and strong jobs data as triggers, but said the correction was largely a rebalancing of crowded trades rather than systemic risk. Everbright Securities agreed, noting that while A‑share risk appetite may dip, the overall trajectory remains upward. Zhongtai Securities added that the Philadelphia Semiconductor Index’s plunge may temporarily suppress sentiment in China’s compute stocks, but the independent drivers of A‑share technology — domestic sci‑tech investment and rapid AI industry growth — remain intact.

Brokerage mid‑term strategies consistently highlight AI as the core track for the second half. Kaiyuan Securities argued that the market has entered a third stage, shifting from risk appetite repair and asset revaluation to profit realization and structural differentiation. Investors now favor quality companies with sustained profit growth and faster distribution. It advised focusing on AI technology including compute, advanced packaging, semiconductor equipment, and large models, alongside cyclical sectors such as non‑ferrous metals and chemicals, consumption opportunities in apparel, catering, and tourism, and high‑dividend plays like city commercial banks, pharma, and utilities. Huatai Securities echoed this view, noting that equity funds have long clustered in tech, but positions and prices still have room to rise under its “fund allocation clock” framework.

The consensus is that industry prosperity remains the decisive factor. China Galaxy Securities pointed to Broadcom’s weaker‑than‑expected AI guidance, which triggered declines in U.S. semiconductors and AI leaders, as evidence that investors must track the sustainability of industry growth. Dongwu Securities stressed that Fed hike expectations alone do not mark a tech peak. AI shows no slowdown, and once positive signals emerge, capital will reprice quickly. Short‑term adjustments from liquidity or sentiment headwinds may be “false falls,” making AI commercialization progress the key metric. GF Securities concluded that technology’s trajectory depends on the AI cycle, with liquidity only supportive. Earnings and industry trends remain the core drivers, and with half‑year reports due from late June, both A‑share and U.S. markets may present new opportunities after recent corrections.

Overall, institutions agree that while volatility may persist, technology growth — especially AI — remains the backbone of the second‑half outlook. Investors are urged to watch industry prosperity signals, earnings sustainability, and commercialization progress, as these will determine whether the tech rally continues or stalls.