The trend of semiconductors since October has not been smooth sailing. In the first phase of the market, a basket of incremental policies drove the market into a general rise, and semiconductors also surged, attracting the attention of capital. In the second phase, the market showed divergence, and with a solid foundation, semiconductors became the vanguard of the rebound and were widely regarded as one of the strongest main lines of the technology bull market. Recently, semiconductors, which are at a short-term high, have begun to undergo technical adjustments. The market, which is in a policy and performance vacuum period, is waiting for the next opportunity to attack.

Capital focuses on semiconductors

Despite the market being full of changes, the enthusiasm for capital has not diminished. As of November 20th, since October 8th, the electronics industry has become the industry most favored by two-way financing funds. Data shows that the two-way financing balance of the electronics industry increased by 75.577 billion yuan during this period, with a financing net inflow of 74.509 billion yuan, ranking first in the Shenwan first-level industry. In the semiconductor industry within the electronics industry, the two-way financing balance increased by 43.329 billion yuan during this period, with a financing net inflow of 42.634 billion yuan, ranking first in the Shenwan second-level industry.

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In the semiconductor industry, digital chip design, semiconductor equipment, and analog chip design are the top three directions in terms of two-way financing balance increase and financing net inflow. Overall, investors are willing to increase investment scale through leverage operations, fully reflecting their great confidence in the future development prospects of semiconductors, especially the upstream semiconductor industry.

A lot of capital is using ETFs to lay out semiconductor opportunities. Data shows that since October 8th, the net subscription amount of semiconductor chip ETFs has reached 9.988 billion yuan, of which semiconductor material and equipment track ETFs have received net subscriptions of 2.168 billion yuan, accounting for more than 20%. From November 12th to November 20th, as the market retraces below 3,300 points, capital continued to increase its position against the market. The net subscription amount of semiconductor chip ETFs reached 5.483 billion yuan, of which semiconductor material and equipment track ETFs received net subscriptions of 1.939 billion yuan, with the proportion increasing to 35%. Taking the semiconductor material ETF (562590) as an example, during this period, capital has been buying for 6 consecutive trading days, with a total of 268 million yuan absorbed.

It can be said that under the support of the two major logics of domestic substitution and cycle recovery, the index has experienced a rapid rebound, and after two consecutive new highs, the market sentiment has been ignited. Therefore, more and more investors are paying attention to the risks of semiconductors at a high level.

In previous articles, we emphasized that AI is an important leader in the recovery of the semiconductor industry, so the performance of Nvidia needs to be taken seriously, which may cause short-term fluctuations in the sector.

AI chip overlord Nvidia's latest financial report announced

On Thursday morning, Nvidia, the AI chip overlord called "the most important stock on Earth" by Goldman Sachs, announced its latest financial report. The report shows that in the third quarter, Nvidia's revenue reached a new high of 35.1 billion US dollars, a year-on-year increase of 94%, higher than the expected 33.25 billion US dollars by analysts, but the growth rate has slowed down compared to the previous quarter. The adjusted earnings per share were 0.81 US dollars, exceeding the expected 0.74 US dollars per share.

Nvidia's performance data is so dazzling, and the main source of revenue growth comes from the increase in demand for H200. The good news is that the company recently launched a more advanced architecture - Blackwell, which will greatly surpass the performance of the previously very successful Hopper environment. The mass production progress of Blackwell in the fourth quarter is on schedule, dispelling previous market concerns about Blackwell.

According to the comments of Nvidia's CFO, the company will supply both Blackwell and Hopper products in the fiscal year 2025 and beyond. As I mentioned in previous articles, Nvidia has won a big victory with Blackwell, and its system orders are already full for the next 12 months, which has been confirmed again.

From Nvidia's financial report, AI chips, as the core driving force of semiconductor recovery, have further confirmed their future growth trend. For domestic semiconductors, there are positive impacts in the following aspects:

1) Market sentiment boost: Nvidia's better-than-expected financial report has significantly increased market confidence in the semiconductor industry. As the world's leading AI chip manufacturer, Nvidia's strong performance has verified the demand recovery and growth potential of the global semiconductor industry, which is a positive signal for domestic semiconductor companies.

2) Technology benchmarking: Nvidia's leading position in AI chips and high-performance computing has prompted domestic semiconductor companies to accelerate technological innovation and product development. Domestic companies such as Hygon Information and Xingyuan Micro have increased investment in high-performance computing and storage chips, striving to narrow the technological gap with international leading companies.

3) Domestic substitution: Faced with international technology blockades and export controls, domestic companies are accelerating the promotion of domestic substitution, especially in key technologies and equipment. Nvidia's performance has inspired domestic companies to follow the path of independent research and development more firmly, enhancing their ability to control themselves.

4) Downstream demand drive: Nvidia's strong performance in the data center field has driven the demand for high-performance computing chips, storage chips, and other products. Domestic semiconductor companies have benefited from this increase in demand, with increased order volume, and improved revenue and profit levels.

Future trends and risks

Despite delivering better-than-expected results, Nvidia's stock price fell after the performance due to the fourth-quarter performance guidance not reaching the highest expectation. This is due to its own large market value and high valuation, which inevitably leads to market sensitivity. Domestically, after two consecutive rounds of significant increases, semiconductors are basically at a high level, so most funds are currently in a wait-and-see position.

In the medium and long term, due to the shortage of supply for Blackwell, Nvidia is expected to have certain support for performance growth until the fiscal year 2026. Therefore, the investment logic of the domestic semiconductor sector is expected to revolve around "domestic substitution + cycle recovery + overseas mapping".

Looking at the index trend, according to the RSI (Relative Strength Index), the current RSI of the semiconductor material equipment index is around 50, and the RSI was between 80-96 at the previous high price peak. According to market views, the general range of change for the relative strength index is between 30 and 70, with more opportunities between 40 and 60, and few opportunities above 80 or below 20. Therefore, after adjustment, the next round of increases may be expected.