Pre-market Briefing for August 4

[Market Overview]

The Nasdaq surged more than 2% yesterday, while the S&P 500 rose nearly 1.5%, bringing it closer 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 noticeable shift in the market currently is capital rotation within the AI sector.

Geopolitical tensions in the Middle East have further eased, significantly boosting market risk appetite. Meanwhile, AI and cloud business metrics from major tech firms like Microsoft and Amazon continue to exceed expectations, reaffirming that AI commercialization and demand for computing power remain on an upward trajectory.

In terms of capital flows, memory and CPU sectors have cooled slightly in the short term, while optical modules, data centers, and power infrastructure—sectors enjoying strong momentum—have become new focal points for investment.

Memory Sector: Watch Micron and SK Hynix

In the memory sector, Micron and SK Hynix, whose price movements have remained relatively stable, remain key long-term focuses.

MU (Micron): The level around $730 has largely been confirmed as a significant 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 gradually building positions, with an upside target of $950–$970. SK Hynix: The key resistance to watch is around $160. A decisive breakout above this level could trigger a new upswing. The recent low near $125 serves as a short-term support, with an upside target of $165–$170.

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

Optical Modules: Becoming the most concentrated area for capital

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

The strength in optical modules was primarily driven by two factors: first, upstream material supplies remain tight; second, Microsoft and Amazon's cloud businesses continue to expand, further boosting market expectations for demand for high-speed optical modules at 1.6T and even 3.2T.

LITE: Investors I previously advised to enter positions near USD 700 have already realized solid gains and may continue holding, with a target range of USD 880–900.

AAOI: This is a high-beta stock within the sector. USD 90 serves as a key breakout level for the new rally; as long as it holds above this level, the medium-term target can be set at USD 140–150.

AXTI: Also a highly volatile stock, suitable for small-position, phased entries. Use USD 55 as a critical risk control level, with an upside target range of USD 80–85.

AAOI and AXTI exhibit significant volatility and are suitable only for aggressive investors who can tolerate substantial drawdowns. Heavy positions or chasing highs are not recommended.

Data Centers: Watch CRWV and NBIS

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

However, both stocks are now approaching their medium-term moving average resistance zone, increasing the risk of chasing prices higher from current levels. If entering, only small, phased positions are advisable.

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

Catch-up rally plays: Watch FSLR and RKLB

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

FSLR (First Solar): With continued expansion of AI data centers, market demand for renewable energy generation and power supply is expected to keep rising. Consider an initial position near $230; if the stock pulls back to around $205, consider a second entry.

RKLB: After a prolonged adjustment period, the commercial space sector has started showing signs of capital inflow, with shares rising over 8% yesterday. If sector sentiment continues to improve, the rebound target could reach $85–$90.

Summary

The broader index continues to rebound, but capital rotation within the AI sector has become very evident. At this stage, focus on market leaders in the most active segments—optical modules and data centers—and maintain attention on core memory stocks like Micron and SK Hynix. Operationally, favor small positions and staged entries.

If you find these insights helpful, follow me—your support motivates me to keep posting updates.

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

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