High-beta AAOI vs. stable MRVL; AMD shows short-term strength in CPUs

Last Friday, a clear internal rotation target emerged within the optical transceiver sector: AAOI. After consolidating sideways in the $130–$135 range for nearly two weeks, AAOI finally broke out with significant volume last week, surging over 15% in a single day. However, please note that I do not believe this signals a fresh rally for the entire optical transceiver sector. More accurately, AAOI's rise resembles a catch-up play and individual stock rotation within the sector. Core holdings like LITE have already surged, prompting capital to seek laggards with relatively smaller prior gains and higher elasticity, conditions that AAOI fits perfectly.

1 $Applied Optoelectronics (AAOI.US)$ If you are looking for a more aggressive target within the optical transceiver space, I believe AAOI warrants close attention at this stage. Consider initiating a first tranche of positions between $145 and $150. If a correction occurs later, look to add a second tranche in the $115–$120 range, which will make overall cost basis and risk easier to manage. Additionally, AAOI saw notable volume expansion on Friday. If capital continues to cluster in the optical transceiver sector this week, high-elasticity stocks may experience accelerated continuous upward momentum. If you find AAOI too volatile but remain bullish on the optical transceiver sector, I suggest keeping an eye on MRVL.

2 $Marvell Technology (MRVL.US)$ Consider initiating a first position in MRVL near the $220 level. Unlike high-beta stocks such as AAIO, MRVL's advantage lies not in short-term explosive momentum but in stability. Furthermore, MRVL has deep business ties with NVIDIA. If AI commercialization continues to gain traction and demand for high-speed interconnects and related hardware in data centers keeps growing, MRVL still offers solid growth potential. From the current stock price perspective, I believe the market has not fully priced in its future growth prospects. Therefore, for conservative investors, the area around $220 remains a suitable entry point for an initial position. Even if geopolitical tensions in the Middle East escalate again this week, leading to a broader correction in tech stocks, it would not be a major concern. If the price adjusts further to the $185–$190 range, you can add to your position in tranches to lower your average cost. The key advantage of this strategy is that it does not rely on betting on a short-term market rally, making the overall risk more manageable.

Finally, let's take a look at CPU stocks.

3 $Advanced Micro Devices (AMD.US)$ Last Friday, AMD finally posted a noticeable surge with increased volume, rising over 6% in a single day and reclaiming the level above $510. From a technical structure perspective, I believe AMD is showing signs of short-term strengthening. If you had previously established a position near $485, I would advise against selling everything at once. If AMD continues to push higher toward $530 after the open today, consider taking some profits, while holding the remainder for a second target of $580. For those who completely missed the CPU theme, if you feel memory stocks have risen too much and optical transceivers are too volatile in the short term, making you reluctant to chase highs in those areas, AMD offers a relatively aggressive opportunity for phased entry. The area around $500 can still serve as the range for an initial position. If the stock price adjusts again due to Middle East tensions or other macroeconomic factors, we can look for another opportunity to lower the cost basis based on the market environment at that time, while maintaining the upper target at $580.

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