Apple and Amazon reported starkly contrasting earnings— which one are you bullish on?
Market Insights | AI capital is shifting lanes—have you jumped on board? (Includes MU options rebound strategy)
I. Macro Observations
1.1 Global Macro: South Korea initiates tightening and deleveraging; U.S. core CPI posts first sequential decline
On July 16, the Bank of Korea unanimously raised rates by 25 bps to 2.75%, ending a 13-month period of unchanged rates; the terminal rate for this cycle is expected to reach the 3.5%–3.75% range.This rate hike is not solely aimed at curbing economic overheating but represents a comprehensive tightening response—against sticky inflation, currency depreciation, and high leverage risks in real estate and equities—amid strong semiconductor export growth.
Markets expect the Bank of Korea will most likely deliver another back-to-back rate hike in August, increasing pressure on highly leveraged retail investors to deleverage.This will amplify valuation downside pressure on non-core technology sectors.
U.S. core CPI in June declined by 0.02% month-over-month and dropped to 2.59% year-over-year, marking the first monthly decline since May 2020. Within 'super core services,' auto insurance, healthcare, and accommodation away from home showed notable weakness.The current baseline view is that the Federal Reserve is highly likely to hold rates steady for the remainder of the year, supporting a steepening U.S. Treasury yield curve and stabilizing the valuation anchor for U.S. equities.
1.2 Domestic Macro: June retail sales show 'false' return to growth; tier-1 property markets signal stabilization
June retail sales turned positive year-over-year at +1.0%, up from the previous reading of -0.6% and surpassing market expectations of -0.1%. However, thisdoes not signal a broad-based recovery., but rather a temporary stabilization driven by the 'June 18 shopping festival + post-Gaokao spending release.' Auto retail sales declined by 16.1% year-over-year, marking the second consecutive month of deep contraction and remaining the largest single drag.
GDP grew by a cumulative 4.7% year-to-date in the first half, with Q2 alone posting +4.3% growth; exports rose 17.5% year-over-year, reaching a multi-year high; exports of machinery and electrical products increased by 20.1%.
In the property sector, new home prices in first-tier cities rose 0.1% month-over-month, while secondhand home prices increased 0.3% month-over-month—marking four consecutive months of positive growth. Genuine housing demand in core cities is undergoing substantive recovery. However, real estate development investment fell 18.0% year-to-date through June, with new construction starts down 23.4% and completions down 23.7%.The supply side remains at a bottoming-out phase.
Source: National Bureau of Statistics
Source: National Bureau of Statistics
II. Market Views
2.1 U.S. Equity Market: Both the S&P 500 and Nasdaq declined—how to navigate the repricing window amid AI trade de-crowding?
$S&P 500 Index (.SPX.US)$ Weekly decline of -1.55%, $Nasdaq Composite Index (.IXIC.US)$ -2.9%. The U.S.-Iran conflict pushed WTI crude up 15.5%,The energy sector delivered the strongest performance, while healthcare and consumer staples showed resilience. Technology and communication services were the weakest performers.
Short-term outlook is neutral to cautious, with caution primarily directed at highly crowded AI-related growth sectors. Even strong earnings from Taiwan Semiconductor and ASML failed to attract further market rewards, reflecting investor concerns over slowing marginal AI capital expenditure, uneven profit distribution across the AI supply chain, and slower-than-expected monetization at the application layer relative to hardware investment pace.
In terms of trading structure, 75 new leveraged/inverse ETFs have been launched in the past four weeks, with average daily turnover of USD 34 billion. Stock margin balances have exceeded USD 1.5 trillion, representing 2.04% of the S&P 500’s market capitalization—approaching the peak seen at the end of 2021. Any cracks in the core narrative could be amplified by this trading structure.
As of July 16, the S&P 500’s forward 12-month P/E ratio stood at 20.98. We recommend waiting for tech giants’ earnings reports to confirm capital expenditure and commercialization guidance before deciding whether to increase technology sector weightings again.Within the tech sector, allocation may shift from high-beta equipment and memory stocks toward large-cap platform and software leaders.
Stock Spotlight – $Vertex Pharmaceuticals (VRTX.US)$ : CF remains a strong cash cow, with its nephrology platform and the CRNX acquisition establishing a fifth growth pillar.
The company’s core focus for 2026–2027 has already shifted toward realizing value from its nephrology platform.
The BLA for povetacicept in IgA nephropathy (IgAN) has been accepted, with a PDUFA date of November 30, 2026, and it holds best-in-class potential. Advantages include efficacy, monthly subcutaneous auto-injector dosing, convenience for chronic long-term treatment, and an already-established specialty nephrology sales infrastructure. Sell-side analysts estimate approximately USD 1.3 billion in sales by 2030.
Top-line data from the AMPLIFIED Phase 2 trial of inaxaplin is expected in the second half of 2026. The pre-specified interim analysis at week 48 from the AMPLITUDE Phase 2/3 trial is anticipated in Q1 2027 or early 2027, potentially supporting accelerated approval.
Non-CF commercialization has already begun scaling significantly, with management explicitly forecasting non-CF product revenue to exceed USD 500 million. The CRNX acquisition will enhance non-GAAP operating income by 2029, potentially driving peak annual revenue above USD 5 billion and adding endocrinology as a fifth strategic pillar.
The company continues its established approach in CF, nephrology, and pain—focusing on clear disease etiology, quantifiable endpoints, specialist-driven markets, first- or best-in-class potential, and high-reimbursement therapeutic areas.
Overall,Vertex remains a mid-term allocation candidate as a high-quality, scarce platform biotech focused on rare diseases. The pace at which its kidney disease platform delivers results will be the most critical valuation repricing window over the next 1–2 years.
Source: Bloomberg, company announcements and official websites, compiled by Futu Wealth Management
2.2 Hong Kong Equity Market: Hang Seng Index rose 1.6% for the week; southbound net inflows exceeded HK$30 billion for two consecutive weeks—how much upside remains in this recovery rally?
The Hang Seng Index gained 1.6% over the week, with average daily turnover of HK$312.4 billion, down HK$33 billion from the previous week. Southbound net inflows via Stock Connect totaled approximately HK$37 billion, a sequential decline of HK$2 billion.
From July 1 to 16, southbound net inflows totaled HK$80 billion, compared with HK$27.1 billion for the entire month of June, representing an average daily inflow approximately 4.6 times that of June.Buying activity has clearly shifted from earlier semiconductor hardware positions to internet and AI application assets such as Alibaba, Tencent, and Zhipu.
We maintain a clearly positive near-term stance on Hong Kong equities,Relative returns are expected to continue outperforming US equities, with the market rally characterized as a recovery. Key drivers include low valuations, southbound capital inflows, foreign investors rotating from Japanese and Korean hardware supply chains, and the Cyberspace Administration of China’s new on-device generative AI filings, which reinforce expectations for AI implementation in internet and gaming sectors.
As of July 17, the Hang Seng Index’s forward 12-month P/E stood at 10.67, indicating continued valuation attractiveness.If upcoming interim results from major internet companies further validate earnings strength and AI commercialization progress, the Hong Kong market’s recovery rally still has room to extend; however, if southbound flows weaken or external risks deteriorate sharply, investors should guard against volatility in the pace of this recovery.
Stock Spotlight – $BEONE MEDICINES (06160.HK)$: Zanubrutinib’s hematology platform is already fully priced; solid tumors and next-generation pipeline open a second growth curve
The company’s investment thesis can be broken into two layers: (1) The core certainty asset is the zanubrutinib-based hematology commercialization platform, which is already fully valued; (2) The optionality lies in its solid tumor and next-generation hematology pipelines.
The company is expected to achieve annual profitability for the first time in 2025, reducing reliance on external financing for R&D and enhancing the certainty of its platform value.
In Q1 2026, the company reported revenue of RMB 10.5 billion, up 31% year-over-year; product revenue was RMB 10.3 billion, up 29% YoY; attributable net profit was RMB 1.6 billion, compared to a net loss of RMB 0.95 billion in the same period last year; adjusted net profit reached RMB 2.696 billion, surging 204.6% YoY, demonstrating significant scale-driven profitability.
On the cost side, R&D expenses increased by only 12% YoY, far below revenue growth; SG&A expenses rose 20% YoY, also lagging behind gross profit growth of 41%. Valuation can now begin to be assessed within a profitability framework.
ASCO 2026 will be a critical inflection point amid diverging views. The company has had 24 abstracts accepted, including 3 oral presentations and 15 posters. Positive signals are emerging simultaneously from three key assets: CDK4 inhibitor, GPC3×4-1BB bispecific antibody, and B7-H4 ADC.
– CDK4 inhibitor: shows a tolerability advantage in metastatic breast cancer;
– GPC3×4-1BB bispecific antibody: holds first-in-class (FIC) or best-in-class (BIC) potential in hepatocellular carcinoma;
– B7-H4 ADC: follows a differentiated development path in ovarian cancer.
All these assets point toward advancement into pivotal trials.
In the near term, monitor the dense pipeline catalyst window following ASCO and the pace at which upward guidance revisions for Q1 2026 are realized.
BeiGene Q1 2026 announcement, ASCO 2026 abstract, WIND, compiled by Futu Wealth Management
III. This Week’s Focus
July 22–23: AMD Advancing AI Conference
The market expects AMD to globally unveil its next-generation EPYC server processors based on the Zen 6 architecture, codenamed Venice, at the conference. This product marks AMD’s first mass-produced high-end compute chip built on a 2nm process node.
If product performance and mass production ramp exceed expectations, it will strengthen the competitive landscape of AI infrastructure and development ecosystems; if they fall short, concerns over uneven profit distribution within the semiconductor sector could intensify.
July 23: Google Q2 earnings
The market is closely watching three key aspects:
1. Whether AI Overviews and AI Mode are eroding or expanding the core search advertising business;
2. After a single-quarter cloud revenue of over $20 billion with a 63% high base, whether enterprise AI demand can translate into backlog conversion;
3. Against the backdrop of full-year capex guidance of $180–190 billion, whether free cash flow can support infrastructure investments.
Strong guidance could serve as a key catalyst for re-rating AI applications and cloud services.
IV. Analyst Views
U.S. Equity Summary
Near-term stance remains neutral to cautious. Semiconductor, equipment, and AI infrastructure segments may continue to face pressure ahead of earnings validation.
If tech giants provide stronger capital expenditure and commercialization guidance in their earnings reports, the tech sector may shift internally from high-beta equipment/storage names toward large-cap platform/software leaders.
Cloud vendors have already absorbed the negative impact of this round’s cooling expectations for capital spending and still offer scarce upside exposure within the AI supply chain; cloud vendors are favored in the near term.
Hong Kong Market Summary
The near-term outlook is clearly positive, with the current market move characterized as a recovery rally. Key drivers include low valuations, southbound fund inflows resuming, foreign investors rotating out of Japanese and Korean hardware chains, and converging expectations around AI monetization by internet companies.
Over the medium to long term, the trend of net southbound inflows is expected to continue. A 'barbell strategy' is recommended for portfolio allocation:
– Overweight: Information Technology, Materials, and Health Care sectors;
– Underweight: Consumer Discretionary sector.
V. Options Strategy – Selected Rebound Sectors
Core thesis: Why focus on the memory chip supply chain?
Most severely oversold： $Micron Technology (MU.US)$ / $Seagate Technology (STX.US)$ / $Western Digital (WDC.US)$ Down 28% to 36% from recent highs— $PHLX Semiconductor Index (.SOX.US)$ more than double the broader market’s decline (-17%), offering the strongest fuel for a rebound.
Fundamentals strengthening:UBS has sharply revised its Q3 DRAM contract price forecast upward from +17% to +32% quarter-over-quarter; FactSet projects semiconductor sector Q2 earnings growth of +131% year-over-year (versus just +23.6% for the S&P 500 overall).
Capital has already been quietly accumulating positions:Last week, STX rose 5.7% against the market trend (the second-best performer in the S&P 500), $Lumentum (LITE.US)$ up 3.8%, with capital already stepping in to buy storage-chain stocks at their lows.
Catalyst-rich:July 22 (Wednesday) $Alphabet-A (GOOGL.US)$ and $Tesla (TSLA.US)$ Capex guidance is a direct barometer of storage demand.
Historical pattern: $PHLX Semiconductor Index (.SOX.US)$ In the past decade, there have been six drawdowns exceeding 20%, most of which were followed by V-shaped recoveries.
Why use MU as the primary trading vehicle?
- Extremely low valuation: current forward P/E for the next two years is approximately 6x, with 42 Strong Buy ratings and a median price target of $1,550 (83% upside potential).
- Event vacuum: MU’s next earnings report is on September 23; August-expiring options completely avoid exposure to its own earnings risk and are driven solely by sector catalysts.
- Beta of 2.47, offering high elasticity during sector rebounds; the 50-day moving average at $933 serves as the first technical target.
Key Assumption (Risk Warning):Micron (MU) options have an implied volatility (IV) of approximately 100%, making IV extremely expensive. Avoid naked long calls; instead, use spreads and short-option structures to hedge premium costs. Use the August 21 expiration (covering catalysts from GOOGL and INTC, as well as the July 28–29 FOMC meeting, while avoiding the September 23 earnings date).
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Strategy A: Bull Call Spread (Aggressive Rebound Play)
- Buy 850 Call (~$107) + Sell 1000 Call (~$53), net premium ~$54
- Max profit $96 (if MU ≥ $1,000, +18%), reward-to-risk ratio 1.8:1
- Breakeven at $904 (requires only a 6.4% rebound)
Strategy B: Bull Put Spread (Conservative Alternative | Income-Generating)
- Sell 800 Put + Buy 700 Put, net credit ~$37, max risk $63
- Breakeven at $763 (current price -10%); full profit realized as long as MU stays above $800 (-5.7%) at expiration
- Convert high IV into cash flow
Strategy C: Low-cost collar hedge (for existing long shareholders)
- Buy the 750 put ($58) + sell the 1050 call ($42), net cost only about $16
- Full downside protection beyond -11.7%, with upside potential preserved up to +23.7%
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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