China Tech Diverges: AI Hardware Surges, Moore Threads Hits Limit-Down on Lockup Expiry
TREE NEWS reports: Chinese equities closed mixed on Monday, with a sharp divergence between AI hardware plays and other tech names. The Shanghai Composite edged up 0.07%, but the Shenzhen Component Index jumped 1.91% and the ChiNext Index surged 3.64%, driven by a broad rally in computing power hardware. Meanwhile, Hong Kong’s Hang Seng Index fell 0.93% and the Hang Seng Tech Index dropped 0.92%, as major internet and tech stocks came under pressure.
What Happened
The standout performer was Zhongji Innolight (ZJIL), a leading optical module maker. Its A-shares rose over 10% to surpass 900 yuan per share, with trading volume exceeding 30 billion yuan and market capitalization reaching 1.06 trillion yuan. Its H-shares surged nearly 20% intraday. The rally was fueled by a Goldman Sachs report initiating coverage on ZJIL’s H-shares with a ‘Buy’ rating and a 12-month target price of HK$3,267. Goldman cited ZJIL’s leadership in silicon photonics, accelerating mass production of 1.6T and higher solutions, and supply chain stability.
In contrast, AI chip maker Moore Threads hit its 20% limit-down for the first time since its IPO, after a lock-up expiry released 25.77 million shares (5.48% of total share capital) into the market, increasing floating shares by 85%. The stock closed at 415.49 yuan, a record low, and its market cap fell below 200 billion yuan. Another chip firm, MX (Moshare), fell nearly 10%.
Market Implications
The divergent moves reflect a two-pronged narrative in China’s tech sector. On one hand, the AI hardware boom continues unabated, driven by global AI capex. The release of GPT-6 Astra, trained on a cluster of ~100,000 Nvidia GPUs, underscores the insatiable demand for high-speed optical interconnect. Goldman’s upward revision of the optical module TAM—from $37.6 billion in 2025 to $148.5 billion by 2028—signals strong multi-year growth. This benefits not only ZJIL but also other optical and PCB names like Source Photonics, Shennan Circuits, and Wus Printed Circuit.
On the other hand, the Moore Threads lock-up expiry highlights the risks of high-valuation, low-float tech stocks. Moore Threads, which listed in December 2025 at 114.28 yuan, surged 425% on debut and peaked at 941.08 yuan within five sessions. Now at ~400 yuan, the stock is still richly valued relative to its fundamentals (H1 2026 revenue of 1.736 billion yuan, still loss-making). The unlock expands the float significantly, triggering a sharp sell-off. This could be a cautionary tale for other recently listed tech darlings with large lock-up overhangs.
Broader market implications: The rally in AI hardware contrasts with weakness in consumer tech (Baidu fell 5%, Xiaomi 4% in Hong Kong) and traditional sectors (banks, coal, oil). This rotation suggests investors are favoring companies with direct exposure to AI infrastructure spending, while shunning those with weaker growth or regulatory overhangs. The bond market saw slight gains in treasury futures, while commodities were mixed.
Key Takeaways for Investors
- AI infrastructure remains a core theme: Optical modules, PCB, and CPO are seeing robust demand, with Goldman’s TAM upgrade adding conviction. Look for companies with strong silicon photonics and 1.6T+ capabilities.
- Lock-up expiries are a risk: Moore Threads’ crash shows that even high-growth names can suffer when supply increases. Check lock-up calendars for other recent IPOs.
- H-share/A-share divergence: ZJIL’s H-shares outperformed A-shares, reflecting different investor bases and liquidity. Goldman’s H-share initiation may attract international capital.
- Defensive rotation: Consumer and tourism stocks (e.g., Guofang Group) are gaining on policy support, but these are more of a defensive play in a choppy market.
As the AI trade matures, differentiation within the sector will intensify. Investors should focus on fundamentals, valuation, and supply-demand dynamics rather than broad sector bets.
