AI Market Enters 'Shrinking Circle' Era: From Broad Rally Narratives to Hard-Core Verification

Keywords: AI market, shrinking circle, bottleneck effect, computing hardware, supply-demand imbalance, fund allocation, earnings verification

Introduction

After a period of broad diffusion, the AI market is rapidly entering a 'shrinking circle' phase. Market funds are no longer chasing generalized concept heat but are more inclined to focus on sub-sectors with real earnings, supply-demand gaps, and industrial barriers. For investors, this means AI investment logic has shifted from 'storytelling' to 'performance delivery,' moving from theme-driven to a new stage of fundamentals verification.

Main Body

I. From 'Broad Rally' to 'Selectivity': AI Investing Enters the Second Half

The significant divergence in recent fund performance fully illustrates the direction of the AI market's evolution. Sub-theme funds such as semiconductors, chips, and materials & equipment performed strongly, with some product NAV growth significantly ahead of the market average. Meanwhile, actively managed equity funds with heavy positions in high-quality individual stocks have also achieved excess returns in this structural market. This phenomenon shows that the AI sector is no longer a 'broad market' where all stocks rise simultaneously but has entered a strict stock-picking stage.

The fundamental reason for capital concentration in a few directions is limited incremental capital. To sustain the entire sector's upward momentum, huge amounts of capital need to continuously flow in, but the market tends to choose the links with the highest certainty. Thus, directions with earnings support, such as computing hardware, core components, and advanced manufacturing, have become the focus of fund clustering.

II. Investment Logic Shift: From 'Bamboo Pole Effect' to 'Cask Effect'

The pricing logic of the current AI value chain is shifting from the 'bamboo pole effect' to the 'cask effect.' The former emphasizes that leading companies determine industry heights, while the latter emphasizes that weak links limit overall production capacity and profitability. As large models, cloud vendors, and terminal applications continue to advance, supply bottlenecks in the value chain are being amplified. Scarce raw materials, core components, and high-end equipment are becoming new centers of prosperity.

This change means that AI investing no longer focuses only on technological breakthroughs but must also identify which link experiences supply-demand imbalance first. Where capacity is insufficient, orders are tight, and profit elasticity is stronger, those areas are more likely to become the focus of capital pursuit. For fund managers, tracking the revenue growth of core leaders, global capital expenditure changes, and the degree of supply chain tightness has become an important basis for position sizing.

III. Left-Side Opportunities Are Emerging

Although market hotspots are highly concentrated, the AI value chain is not only the upstream computing power that has been fully traded. Midstream large model R&D, downstream scenario applications, and tech exports are still in early stages of industry growth, receiving relatively less market attention, and instead harboring more elastic left-side opportunities.

Especially in emerging tracks such as consumer electronics, robotics, and smart glasses, domestic companies are gradually building global competitiveness through product strength and supply chain advantages. As overseas markets expand and commercialization progresses, these companies are expected to move from 'manufacturing advantages' to 'global brand advantages,' becoming important incremental sources in the next phase of the AI value chain.

Conclusion

Overall, the 'shrinking circle' of the AI market does not mean fewer opportunities but rather that opportunities are more concentrated and screening is stricter. The market's main themes in the future will still revolve around computing hardware, semiconductor equipment, core components, and sub-sector leaders with global competitiveness. For investors, what is truly worth paying attention to is not the broad rally driven by short-term sentiment but the hard-core assets that can continuously deliver earnings amid supply-demand imbalances and expand boundaries through technology iteration. In the second half of AI investing, the competition is no longer about imagination but about certainty.