Global funds return to tech theme, Asian equities see highest inflows in nearly four years! Are semiconductors poised for a dual catalyst of dip-buying capital and fundamentals?

Title context: Global funds return to tech theme, Asian equities see highest inflows in nearly four years! Are semiconductors poised for a dual catalyst of dip-buying capital and fundamentals? Text: Just as the U.S. semiconductor sector suffered a sharp selloff on Thursday, capital in Asian markets was stepping in at lower levels to pick up popular AI computing power and semiconductor stock targets. On October 22, the Philadelphia Semiconductor Index fell 6.72%, the Nasdaq Composite dropped 2.60%, and Nvidia and Micron fell 4.40% and 6.26%, respectively. The next day, South Korea's KOSPI reversed from an intraday decline of more than 4% to close up 0.30%, with SK Hynix rising 4.42% and Samsung Electronics edging up 0.47%; China's ChiNext Index rebounded from an intraday drop of more than 3% to close up 4.16%, and combined turnover across the Shanghai, Shenzhen and Beijing markets reached about RMB 1.97 trillion. The recovery of memory chip and optical communications leaders became an important driver of this round of reversal in Chinese and South Korean tech stocks. SK Hynix's suspension of its evaluation of a Solidigm listing eased investor concerns about a duplicate listing and valuation discount; Eoptolink Technology Inc. disclosed an RMB 800 million-1 billion buyback plan, and several optical communications companies released operating updates, reinforcing market confidence in orders and product upgrades. Low-level absorption after overselling and positive company-level news reinforced each other, pushing some tech leaders to recover first. A senior analyst said that after concentrated selling of tech stocks in the Chinese and South Korean markets over the past two weeks, some investors may have already taken profits by closing short positions, while funds looking to buy at lows began to enter. When new selling weakens, short covering and dip-buying capital appearing at the same time can produce the kind of sharp rebound in semiconductors and broad tech stocks seen in Chinese and South Korean markets on Friday. LSEG Lipper fund flow data show that equity fund subscription data provide a broader funding backdrop. In the week ended October 21, global equity funds saw net inflows of $28.16 billion, higher than $19.88 billion the previous week, marking a fifth consecutive week of inflows; Asian market equity funds in particular saw large net inflows of $11.53 billion, the highest level since at least December 2022, while European equity funds attracted $9.14 billion and U.S. funds attracted $5.07 billion. However, although U.S. equity funds recorded net subscriptions for a second consecutive week, the scale was about 62% lower than the previous week's $13.37 billion. This set of data reflects relatively optimistic global allocation behavior before Thursday's sharp U.S. market selloffthat is, global investors were still increasing equity exposure, especially aggressively moving into Asian stock markets that had previously lagged the U.S. rally and fallen into correction, while reducing the pace of chasing the U.S. stock market, which had recently hit new highs. Undoubtedly, the two core variables supporting the radiating buying power in equity markets are the downward trajectory of the 10-year U.S. Treasury yield and the earnings realization of semiconductor and cloud computing giants tied to the AI computing power theme. The U.S. 10-year Treasury yield has fallen nearly 38 basis points from its 24.5-year high of 5.3645% in early October and has dropped below 5%; among the roughly 24% of S&P 500 companies that have reported results, about 82% beat earnings expectations, and among the roughly 18% of MSCI All Country World Index constituents that have disclosed results, about 73% beat expectations. Although the MSCI World Index still fell 1.31% on October 22, the strong earnings expansion in the semiconductor sector closely tied to the AI computing power theme and the easing of discount-rate pressure have already provided a basis for capital to reassess tech stocks. For the epicenter of the AI trade and tech stock selloffnamely the memory chip sector that has recently been hit hardLSEG Lipper fund flows show that global technology sector funds saw net inflows of $5.05 billion for the week, reversing the previous week's large outflow. Optimism on fundamentals remains strong, and KeyBanc's recent Asia survey data show that AI data centers are still absorbing memory and other AI computing power resource supply on a broad scale, pushing price increases through 2027. The institution forecasts that blended HBM prices could rise sharply by 80%-100% in the first quarter of 2027; at the DRAM memory price level, KeyBanc forecasts a quarter-on-quarter increase of 15%-20% in the fourth quarter of 2026 on top of a strong third-quarter price increase base, followed by another 10%-15% increase in the first quarter of 2027; for future NAND pricing, it forecasts a quarter-on-quarter increase of about 20% in the fourth quarter of 2026 on top of a strong third-quarter base, followed by another 10%-15% increase in the first quarter of 2027. Tech reflow, credit divergence: capital begins to pick "who can survive the financing test" LSEG Lipper fund flow data show that global capital is increasing technology exposure while raising requirements for company size, liquidity and financing capacity. Global technology sector funds saw net inflows of $5.05 billion for the week, reversing the previous week's net outflow of $4.77 billion; healthcare funds attracted $1.83 billion, while consumer discretionary funds saw outflows of $1.29 billion. Within the U.S. market, large-cap and mid-cap funds attracted $8.63 billion and $1.92 billion, respectively, while small-cap funds saw outflows of $4.24 billion. U.S. sector funds ended two consecutive weeks of redemptions, with total inflows of $1.8 billion, of which metals and mining, technology and industrials saw net inflows of $1.18 billion, $429 million and $269 million, respectively. The allocation preference most worth noting here is that global capital is more willing to take on investment risk in stock markets with strong earnings support, while still keeping its distance from companies with weaker financing capacity, which also explains why Asian stock marketshome to the vast majority of fundamentally strong leaders in the global AI computing power supply chainare seeing increasingly strong capital inflows. The bond market is also showing divergence. Global bond funds attracted money for a fifth consecutive week, with net inflows of $9.44 billion, of which CHF-denominated bond funds saw inflows of $6.8 billion, the highest since at least November 2024, and short-term bond funds attracted $2.78 billion; high-yield bond and government bond funds saw outflows of $1.68 billion and $550 million, respectively. U.S. bond funds saw net outflows of $969 million, ending 26 consecutive weeks of net subscriptions: long-term government bond and Treasury funds saw outflows of $3.3 billion, while short- and medium-term funds and municipal bond funds saw inflows of $1.76 billion and $1.56 billion, respectively. The benchmark rate expectations under falling Federal Reserve rate-hike expectations, as well as the downward trajectory of 10-year and 30-year U.S. Treasury yields, have significantly improved the valuation environment, but investors are still actively controlling credit risk and duration risk. Cash and safe-haven assets have also not lost their investment appeal. Global money market funds swung from an outflow of $47.51 billion the previous week to an inflow of $15.86 billion, of which the U.S. swung from an outflow of $45.93 billion to an inflow of $14.82 billion; gold and other precious metals funds attracted $1.29 billion, the fifth net inflow in nearly six weeks, and energy funds received $41.5 million. Data covering 29,174 emerging market funds show that equity funds attracted $6.28 billion, the highest since August 5, while bond funds saw a small outflow of $48.72 million. Overall allocation shows a portfolio characterized by "selective equity adding, cash retaining flexibility, and strict credit screening." These global fund flow dynamics and major trends shown by LSEG Lipper fund flow data also partly explain why JPMorgan and UBS still see room for dip-buying and adding positions in the AI computing power theme and broader semiconductor and tech stocks. JPMorgan estimates, based on its tech sector sample and model, that cash flow this year will be about $2.2 trillion and corresponding investment about $1.8 trillion, creating a financing surplus of about $400 billion; new cloud vendors facing financing pressure may change who builds projects, but may not end the entire AI capex cycle. At the same time, the bank estimates that semiconductors contribute about 21% of global equity portfolio risk but account for only about 13% of market capitalization weight, and concentrated positioning and risk-limit adjustments can amplify short-term declines. UBS, meanwhile, pointed out that the relative strength indicators for the Hang Seng Tech Index and CSI 300 fell to about 27 and 23.9, respectively, and that short positioning in U.S. stocks is relatively high, increasing the possibility of oversold repair and short covering. The positive judgments of both point to the same conclusion: selling pressure is being released, and those fundamentally strong leaders in the AI computing power supply chain with cash flow and order support are better positioned to be repriced first. Against the backdrop of AI monetization and computing power orders, Nvidia remains the absolute optimistic pricing anchor for Wall Street bulls The earnings report of Meta, the parent company of Facebook and Instagram, presented the core contradiction of the current AI tradethat is, commercialization around the AI wave is accelerating, while infrastructure spending is consuming cash even faster. The company's third-quarter revenue was $64.601 billion, up 26% year on year, with advertising revenue reaching $63.061 billion; excluding $9.89 billion in legal expenses, operating profit rose 11% year on year, and fourth-quarter revenue guidance was $73 billion-$76 billion. But capital expenditure for the quarter reached $34.91 billion, free cash flow was negative $2.12 billion, and the lower end of full-year capex guidance was raised from $130 billion to $135 billion, with the upper end maintained at $145 billion. Future spending commitments of about $825 billion further extend the time frame for the market to assess investment returns; however, these are multi-year lease and procurement arrangements, not single-year capex. Support from AI revenue can already be observed in advertising performance: after Meta expanded application of its GEM advertising model, conversion volumes for off-site conversion ads and app ads increased by 1.7% and 9.6%, respectively. Muse, meanwhile, attracted more than 10 million sign-ups about six weeks after launching in the U.S. and Canada, with about 25% of sign-up users using it daily. Meta is advancing transaction service fees, personal and enterprise subscriptions, and expects to improve Muse's computing cost efficiency by more than tenfold over the next year. The advertising business provides current cash generation capacity, while Muse provides new room for user and transaction growth; Muse has not yet separately disclosed revenue, and users' shopping amounts cannot be directly treated as Meta revenue. The newly created non-voting shares were initially implemented through distribution to existing shareholders, equivalent to a stock split, and do not in themselves equal current equity financing, but their future financing use deepens the market's attention to financing costs and capital needs. Reasoning from infrastructure mechanisms, broader use of agents like Muse will simultaneously increase demand for model inference, tool execution and state management: GPUs and custom accelerators handle model computation, CPUs carry browsers, database queries and business orchestration, HBM and server DRAM hold models, context and concurrent working environments, enterprise SSDs store indexes and persistent state, HDDs handle long-term retained data after screening, compression and deduplication, and networking, optical interconnect, power and liquid cooling jointly support continuous operation. This corresponds to accelerated computing from Nvidia and AMD, custom chips and interconnect from Broadcom, memory from Micron and SK Hynix, high-capacity storage from Seagate and Western Digital, and manufacturing and packaging/testing opportunities from TSMC and Amkor. Capex expansion strengthens the demand base across the entire supply chain, while specific orders and profits still depend on each company's product share and delivery capability. The positive view of the memory industry from Wall Street financial giant Bank of America also revolves around HBM4 adoption and SOCAMM and enterprise SSD demand brought by advanced GPU and ASIC upgrades. Different tiers of memory and storage undertake different tasks, and configuration changes for a single GPU cannot be directly equated with a decline in overall data center demand. The DSX POD released at GTC Berlin moves the integration of computing, networking, power and liquid cooling forward into the manufacturing stage, shortening on-site deployment time to as fast as 14 days at sites where power, cooling and networking are already ready, with delivery planned for early 2027. Its investment implication is to improve the conversion speed from "equipment deliverycomputing power going liveservice revenue," rather than eliminating constraints from power supply and construction conditions. SpaceX provided another set of evidence of revenue realizationthe company's third-quarter revenue was $14.575 billion, up 161% year on year; revenue from superintelligence businesses including cloud services, software and advertising was $7.560 billion, up 830% year on year, and operating profit turned positive at $431 million. Management said short-term computing power contract renewal prices continue to rise and expects at least 13 gigawatts of computing power online by the end of 2027. Bank of America raised its target price to $275 from $235 after the earnings report and maintained a "Buy" rating, focusing on the first-quarter 2027 revenue guidance of $33 billion-$37 billion significantly exceeding the market expectation of about $22 billion before the report; relative to Thursday's closing price of $144.75, the target price implies about 90% potential upside. SpaceX's strong earnings and outlook also provide demand-side support for Nvidia's computing power expansion narrative at GTC Berlin. Musk further said he expects computing capacity online to reach 2.5-3 gigawatts by year-end and is confident of adding another 10 gigawatts in 2027, with next year's deployment mainly using Nvidia's Vera Rubin platform. This expansion plan echoes GTC's DSX POD accelerating on-site deployment and key supply chains expanding capacity: customers need operational computing power faster, and Nvidia is focused on shortening the distance between hardware delivery and the generation of computing service revenue. For the semiconductor market, AI business revenue realization and next-generation computing power procurement plans corroborate each other, providing more concrete support for order growth expectations across the entire AI computing power supply chain, including Nvidia AI GPUs and HBM, high-speed optical interconnect for data centers, power supply and liquid cooling chains, and also adding fundamental catalysts to the "AI bull market narrative." Nvidia, with a market capitalization of about $5.1 trillion, remains an important bullish pricing anchor on Wall Street amid this round of bull-bear divergence. Citi maintained a "Buy" rating and a $315 target price on October 22; Morgan Stanley maintained a $300 target price and restored its "top semiconductor pick" status in October; Bank of America's target price in August was $350. Based on the October 22 closing price of $212.21, $300, $315 and $350 imply about 41.4%, 48.4% and 64.9% potential upside, respectively. The core of these target-price bets is that next-generation platform delivery, customer computing power going live and continued procurement can drive earnings growth. For the semiconductor sector and the trajectory of tech stocks, capital return and oversold repair provide conditions for a counterattack, while order conversion and cash returns determine how far the rally can go.