## The earning effect is still there, but you need to find the right direction

The A-shares have closed positively for six consecutive trading days. What is the real driving force behind this strong trend? Ultimately, it’s institutional funds gradually flowing back. This inflow directly activates the market’s earning potential. The current issue is not whether you can make money, but how to find a consistently profitable direction.

Looking at recent market features, it’s very clear—when trading volume increases, the core sectors controlled by institutions lead the rally; when trading volume decreases, quantitative funds start pushing various themes into rapid rotation. December 24th is a typical example; the commercial aerospace sector adjusted in the morning and then surged in the afternoon, wrapping up gains. This rhythm is almost a nightmare for ordinary investors.

Quantitative funds prefer to trade in directions mainly including local stocks in Fujian, local stocks in Hainan, consumer small caps, and controlled nuclear fusion—these are mostly short-term trading ideas. Institutions, on the other hand, focus on four long-term main lines—AI computing power, optical chip industry chain, domestic substitution of semiconductors, and the entire new energy industry chain (lithium mines, electrolytes, energy storage, inverters). Although these sectors also experience intra-sector rotation, their logic is clearer and more certain.

## Stick to the main line if you can’t keep up with rotation

If you can’t keep pace with the rapid rotation of quantitative funds, the best strategy is to stick to the core targets led by institutions, waiting for the spring market that may be brought by further inflows after the holiday. Coupled with the recent positive signals from the central bank, it’s expected that the market will continue this rotation rebound, and structural opportunities will still be concentrated in these main lines where institutions are deploying.

## How to specifically position?

**NVIDIA Rubin Chain’s niche opportunities**

Next year in Q2, NVIDIA Rubin servers will begin mass production, which will directly boost demand for liquid cooling systems, Q-boards, drill needles, and ultra-low profile copper foils. Related companies have already risen for three consecutive days, as highlighted in institutional conference calls. Key targets include leading companies in Q-boards, core suppliers of HVLP copper foil, drill needle leaders, and liquid cooling stocks. The sector has already gained significant ground, so beginners should avoid chasing highs and wait for pullbacks to find low-entry points.

**Optical chip industry chain remains the most stable**

The optical sector has high consensus among institutions for next year and is worth continuing to deploy. Focus on leading companies in optical modules, optical chips, and isolators. These companies have high technical barriers and will benefit long-term from the growth in computing power demand.

**Don’t follow the commercial aerospace trend for now**

Although there has been a recent rebound in commercial aerospace, it looks very attractive, but this sector is dominated by quantitative funds, with volatile and fast rotation. Blindly following at this stage can easily lead to mis-timed moves and losses. It’s better to observe first.

**AIDC direction in power equipment**

This sector is relatively stable in the short term and has a medium- to long-term logic. Focus on the transformer segment within the AIDC field, which is essential for overseas AI servers and has clear growth potential. Several leading companies in this area are worth paying attention to.

**The certainty of domestic substitution in semiconductors**

Continue to deploy according to previous ideas, focusing on key directions such as storage devices, lithography machines, and photoresists. The expectation of storage contract price increases in Q2 2025 is very clear, along with the logic of rising prices due to increased wafer fab capacity utilization, and the deepening of domestic substitution in equipment. These niche leading companies have both performance recovery potential and valuation repair space.