To The Moon

The recent rebound in US technology stocks offered some relief after last week’s sharp sell-off. Optical communications, memory and semiconductor-related shares attracted renewed buying, suggesting that investors have not abandoned the AI growth story.

However, the recovery remains fragile. $NVIDIA(NVDA)$ continued to face company-specific pressure, while investors were still waiting for confirmation that inflation was cooling enough to give the Federal Reserve room to ease monetary policy.

Now the October US CPI figures have added another complication.

1. AI demand remains strong, but the market is becoming more selective

The rebound across parts of the AI supply chain shows that investors are still interested in companies benefiting from data-centre investment.

Optical components, memory, semiconductor manufacturing and chip equipment remain important parts of the AI infrastructure build-out.

But not every AI-related stock will benefit equally. Investors are increasingly looking at earnings growth, order visibility, margins and cash flow rather than simply buying anything associated with AI.

Nvidia’s recent weakness also highlights how company-specific risks can outweigh positive industry trends.

2. CPI makes the interest-rate outlook more difficult

October US headline CPI increased 0.4% month-on-month, compared with 0.6% in September. Core CPI increased 0.3%, unchanged from the previous two months.

Both readings were above market expectations. The missing October 2025 data also meant the BLS could not publish the usual 12-month inflation comparisons.

This is not the inflation relief technology investors were hoping for. Higher inflation can keep Treasury yields elevated, put pressure on growth-stock valuations and reduce expectations of near-term rate cuts.

3. Will the US rebound help Hong Kong stocks?

There is a potential positive connection. Stronger demand for AI infrastructure can support sentiment towards Hong Kong-listed semiconductor, technology and supply-chain companies.

However, Hong Kong stocks have their own drivers, including mainland China’s economic recovery, domestic consumption, earnings performance and policy support.

A rally in US chip stocks does not automatically translate into a sustained rally in Hong Kong technology shares.

The latest market reaction illustrates this difference: Asian markets were mixed after the CPI release, with Hong Kong falling while Taiwan and South Korea advanced.

4. My strategy: Focus on earnings, not just the rebound

I would avoid chasing a sharp one-day rally before the market has fully absorbed the inflation data.

For Hong Kong technology stocks, I would focus on:

• $BABA-W(09988)$ : cloud growth, AI monetisation and progress with its chip business.

• $TENCENT(00700)$ : advertising recovery, gaming performance and AI integration.

• Semiconductor companies: order growth, customer demand and the ability to improve margins.

Rather than committing all available cash at once, gradual buying allows investors to manage volatility and keep funds available if prices fall further.

My conclusion

The AI investment story is still alive, but the market is becoming more demanding about valuations and actual financial results.

US technology stocks may recover further if earnings remain strong, but stubborn inflation could continue to limit the upside. Hong Kong stocks may benefit from improving AI sentiment, although local earnings and China’s economic outlook will matter just as much.

For now, I would rather buy companies with improving fundamentals at reasonable valuations than chase the latest rebound.

For discussion purposes only. This is my personal market view, not financial advice or a recommendation to buy or sell any security.