Pre-market Briefing for August 4

[Market Overview]

The Nasdaq surged more than 2% yesterday, while the S&P 500 rose nearly 1.5%, narrowing the gap to its all-time high. However, Lucas noted that the index gains do not mean all AI-related tech stocks are strengthening in unison; the most notable shift in the market right now is capital rotation within the AI sector.

Geopolitical tensions in the Middle East have further eased, significantly boosting market risk appetite. Meanwhile, data from tech giants like Microsoft and Amazon continue to surpass expectations for their AI and cloud businesses, reaffirming ongoing growth in AI commercialization and computing power demand.

From a capital flow perspective, memory and CPU segments have cooled off slightly in the short term, while high-momentum areas such as optical modules, data centers, and power infrastructure have become new focal points for investor capital.

Memory Sector: Watch Micron and SK Hynix

In the memory sector, Micron and SK Hynix—whose price action has remained relatively stable—remain key long-term candidates for attention.

MU (Micron): The level around $730 has largely confirmed as a key low in this correction phase. As long as this support holds, the overall rebound structure remains intact. Should the stock retest the $820–$830 range, investors could consider scaling in gradually, with an upside target of $950–$970. SK Hynix: The critical level to watch is the $160 resistance. A sustained breakout above this level could trigger a fresh upward move. The recent low near $125 serves as a short-term support, with an upside target at $165–$170.

SNDK (SanDisk): Offers higher short-term elasticity but also exhibits greater volatility, making it more suitable for investors with higher risk tolerance.

Optical Modules: The Most Concentrated Area for Capital Flows

Among AI hardware stocks yesterday, optical modules were the strongest performers, with LITE, AAOI, and AXTI all seeing significant capital inflows.

The strength in optical modules is primarily driven by two factors: continued tight supply of upstream materials, and ongoing expansion of Microsoft’s and Amazon’s cloud businesses, which is further elevating market expectations for demand for high-speed optical modules—particularly 1.6T and even 3.2T variants.

LITE: I previously advised investors who established positions near $700 that they have already realized solid gains and may continue holding, with a target range of $880–$900.

AAOI: A high-beta stock within the sector; $90 is a key breakout level for the next leg up. As long as it holds above this level, the medium-term target can be set at $140–$150.

AXTI: Also a highly volatile stock, suitable for small positions entered in tranches. Use $55 as a critical risk-control level, with an upside target of $80–$85.

Both AAOI and AXTI exhibit significant volatility and are only appropriate for aggressive investors who can tolerate substantial drawdowns. Heavy positions or chasing prices at current levels are not recommended.

Data Centers: Watch CRWV and NBIS

Driven by growing demand for cloud computing and AI infrastructure, the data center sector continues to strengthen, with both CRWV and NBIS delivering solid performance yesterday.

However, both stocks are now approaching medium-term moving average resistance zones, increasing the risk of chasing higher prices from current levels. Any entry should be limited to small, staggered positions.

CRWV: Consider initiating the first tranche near $85. If the stock subsequently pulls back to around $75, consider adding a second position.

Catch-up Plays: Watch FSLR and RKLB

For investors concerned about excessive short-term gains in optical modules and data centers, we recommend two relatively lower-positioned catch-up opportunities.

First Solar (FSLR): As AI data centers continue to expand, market demand for new energy power generation and electricity supply is expected to keep rising. Consider the first entry opportunity near $230; if the stock pulls back to around $205, consider a second entry.

Rocket Lab (RKLB): After an extended period of consolidation, the commercial space sector has started seeing capital returning, with shares rising over 8% yesterday. If sector sentiment continues to improve, the rebound target could be in the $85–$90 range.

Summary

The index continues to rebound, but capital rotation within the AI sector has become very evident. At this stage, focus on leading names in the most active areas—such as optical modules and data centers—and maintain watch on core memory plays like Micron and SK Hynix. Use small positions and scale in gradually.

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$Micron Technology (MU.US)$ $SK hynix (SKHY.US)$ $Lumentum (LITE.US)$ $First Solar (FSLR.US)$ $Rocket Lab (RKLB.US)$

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