Garrett Jin: The memory sector has peaked for the time being; hyperscale cloud providers are poised for a rebound.
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Opinion: Neocloud and memory sectors are experiencing position clearing; pullbacks often present the best buying opportunities.
According to BlockBeats, on July 3rd, renowned analyst degentrading stated that the current market is experiencing a sustained sell-off, with IREN and CIFR leading the decline in the Neocloud sector. Even memory stocks, considered the "ultimate momentum factor," have not been spared, with Micron (MU) falling below the $1000 mark reminiscent of its price action after its last earnings release. Meta (META) has also given back some of its previous gains, as the market has soberly assessed the substance of its plans, dampening previous expectations. Degentrading believes that such position clearing is usually drastic and rapid, and he does not believe he has the ability to accurately time the "absolute bottom." However, he emphasizes that this is precisely why investors should conduct in-depth research themselves. Only in this way can they maintain confidence in holding positions during periods of increased market volatility. Degentrading also cautions that leveraged instruments are not suitable for long-term holding, but only for short-term trading over a few days; otherwise, they will face volatility attrition. He advises investors to ensure they can withstand drawdowns, as position clearing, while brutal, often presents the best opportunities to establish new positions.
Agent of "1011 Insider Whale": AI computing power trading is undergoing a shift, with funds flowing from storage chips to hyperscale cloud providers.
According to Odaily Odaily, Garrett Jin, an agent of "1011 Insider Whale," pointed out that the market structure has changed significantly this week, with funds being redistributed within the AI industry chain. Change 1: Signs of a temporary peak in memory chips are emerging. He said that Micron's stock price encountered resistance and fell back around $1,250. Although the financial report was stronger than expected, the stock price was still falling with increasing volume, showing the typical top characteristics of "weakening after the good news is realized". Meanwhile, funds flowed out of the memory sector rapidly. DRAM-related ETFs saw a significant drop in trading volume, and SK Hynix and Samsung Electronics in the South Korean market also weakened. Data shows that foreign capital has withdrawn more than 100 trillion won (approximately US$65 billion) from the South Korean stock market in the past two months. Change 2: Funding shifts to AI hyperscale cloud providers. He pointed out that the real destination for funds is not small and mid-cap AI concept stocks, but core cloud computing giants such as Google, Microsoft, and Amazon. When the chip sector came under pressure last Friday, GOOG and MSFT had already stabilized with increased trading volume, and this week META further strengthened this trend with increased trading volume. Garrett Jin believes that the logic behind this round of capital migration is the "token optimization trend": as more and more simple tasks are handled by low-cost models, value will gradually be concentrated in token-billed cloud services and orchestration layers, rather than the basic model layer. This also constitutes the core moat of hyperscale cloud vendors, and the current strategy should focus on the catch-up opportunities of hyperscale cloud vendors.
Analysis: The AI computing power market is undergoing a shift, with funds flowing from memory chips to cloud providers.
PANews reported on July 5th that Garrett Jin, an agent for "1011 Insider Whale," analyzed that the market structure has changed significantly this week. Funds within the AI industry chain are being redistributed, and signs of a temporary peak in the memory chip market are emerging. Micron's stock price encountered resistance and fell back around $1250. Despite stronger-than-expected earnings, the stock price continued to decline with increasing volume, exhibiting typical top characteristics of "weakening after good news is priced in." SK Hynix and Samsung Electronics in the South Korean market also weakened. Data shows that foreign capital has withdrawn more than 100 trillion won (approximately $65 billion) from the South Korean stock market in the past two months. The real destination of funds is not small and mid-cap AI concept stocks, but core cloud computing giants such as Google, Microsoft, and Amazon.
Analysts are concerned that the memory chip sector may repeat Nvidia's pattern of "new highs in fundamentals, sideways stock price."
According to an article published on the X platform by Odaily researcher Jukan, market expectations for the memory chip sector are currently at a high level. Regardless of whether earnings reports exceed expectations, stock prices may face pressure. If earnings exceed expectations, the market may worry that the industry cycle has peaked; if earnings fall short of expectations, it may be interpreted as the end of the memory chip boom cycle. Jukan also expressed concern that the memory chip sector might repeat Nvidia's previous pattern of "continuously record-breaking fundamentals, but a prolonged period of sideways stock price," meaning that while corporate profits continue to break records, the stock price performance is relatively lackluster because market expectations have already been fully priced in.
JPMorgan Chase: Semiconductor stocks' continued outperformance of cloud service providers may be unsustainable; AI trading may see sector rotation.
According to a report titled "Fund Flows and Liquidity: The Need for AI Rotation" released by JPMorgan Chase on July 3rd, semiconductor stocks—specifically, AI chip and memory manufacturers—have consistently and almost steadily outperformed hyperscale cloud service providers since September of last year. This performance gap appears unsustainable in the long term. The report argues that since semiconductor trading is inherently part of a broader AI market, the current divergence is raising concerns about its sustainability. JPMorgan Chase states that this gap could narrow in two ways. In a positive scenario, as hyperscale cloud providers, AI model providers, and users improve in commercialization, revenue, and profitability, their performance will begin to catch up, gaining a larger share of overall AI value-added. In a negative scenario, if the semiconductor outperformance comes at the expense of customers such as hyperscale cloud providers, AI model providers, or end users, it could dampen their willingness to invest in capital expenditures, ultimately hindering demand for semiconductor companies' products. The report notes that while JPMorgan Chase's internal view leans towards a more positive scenario, analysts' consensus forecast indicates a significant slowdown in hyperscale cloud service provider capital expenditure growth starting next year, which, if true, is closer to a negative scenario. The report states that hyperscale cloud service provider capital expenditure growth is projected to reach 100% in 2026, but may drop to 22% in 2027 and further to 7% in 2028. If this slowdown path holds true, semiconductor transactions could face significant pressure, triggering a more significant and sustained correction in AI transactions across the stock and bond markets. JPMorgan Chase also states that the price of AI computing power will be crucial for hyperscale cloud service providers to commercialize their AI capital expenditures. Higher computing power prices will enable cloud service providers to maintain or increase profit margins. Furthermore, the report states that the rate of money creation in the United States is projected to rise from $1.6 trillion in 2025 to $1.8 trillion in 2026, continuing to support US financial assets, particularly US stocks.
In pre-market trading on the US stock market, semiconductor, memory, and optical communication sectors continued their decline, with Micron and SanDisk both falling by more than 5%.
According to Mars Finance, on July 8th, based on BIT (bit.com) market data, semiconductor stocks generally fell in pre-market trading in the US. Marvell Technology (MRVL) fell 4.46%, Arm (ARM) fell 3.51%, Intel (INTC) fell 3.47%, Lam Research (LRCX) fell 3.11%, and Applied Materials (AMAT) fell 2.85%. The memory sector saw the largest declines, with SanDisk (SNDK) falling 5.59%, Micron Technology (MU) falling 5.28%, Western Digital (WDC) falling 4.53%, and Seagate Technology (STX) falling 4.19%. Optical communication concept stocks also came under pressure, with Astera Labs (ALAB) down 4.57%, Applied Optoelectronics (AAOI) down 4.47%, Credo (CRDO) down 4.42%, Corning (GLW) down 4.22%, Ciena (CIEN) down 3.69%, and Coherent (COHR) down 3.44%.