GF Securities Sees AI Stock Pullback Ending as Funds Rotate to CPO, Servers

GF Securities (Hong Kong) said the July correction in artificial-intelligence stocks has improved the sector’s risk-reward profile. The call matters because it suggests the broader AI investment cycle remains intact even as investors reassess where the next gains may emerge. Capital is shifting away from memory-chip names toward co-packaged optics, or CPO, components and AI server manufacturing, areas positioned to benefit from the next phase of data-center infrastructure spending.

In its latest report, the brokerage said the July pullback was nearing an end and forecast that a rebound could extend through the third quarter. It recommended increasing exposure to the relevant supply chain and named Hon Hai Precision Industry, AMD and optical-components maker Lumentum among its top picks. The report did not disclose specific price targets or quantify the amount of capital rotating from memory stocks into CPO and server-related companies.