In today's capital markets, investing in technology stocks is attracting significant attention. Simply put, technology stocks refer to shares issued by companies in technology-related fields, encompassing cutting-edge sectors such as information technology, biotechnology, new energy, and high-end manufacturing. They represent the direction of innovation and development in the technology industry.
Technological innovation is a key driver of economic development. In the information age, technological advancements are constantly evolving, with new technologies emerging and rapidly being applied across various industries. Take semiconductor technology, for example. As a core cornerstone of modern technology, it continues to drive development in numerous fields, including computing, communications, and artificial intelligence. From the earliest mainframe computers to today's thin and portable laptops and powerful smartphones, advances in semiconductor technology have enabled the continuous upgrading of electronic products, profoundly changing how people live and work. Semiconductor companies have also expanded, and their stock value has seen significant long-term growth.
Why are technology stocks so strong?
- Significantly leading R&D investment signals future growth
In the first half of 2025, R&D investment by companies listed on the Science and Technology Innovation Board (STAR Market) surged by 28% year-on-year, exceeding revenue growth by 7 percentage points, particularly in the semiconductor equipment and AI chip sectors. This type of "R&D frontloading" strategy often indicates a product ramp-up within the next two to three years and is a key leading indicator of industry prosperity. Notably, companies with R&D capitalization rates below 30% are more financially stable and offer greater long-term investment value.
- Semiconductor equipment bidding boom, driving high industry demand
According to SEMI data, the total number of domestic semiconductor equipment biddings in the second quarter of 2025 increased by 40% month-over-month, with equipment delivery cycles extending to 8-10 months. Historically, equipment orders typically lead earnings by 6-9 months, suggesting substantial industry growth in late 2025 and early 2026.
Tech sector comparison:
Semiconductors and AI computing power each have their own strengths
- Investment Pace: Semiconductors have a longer cycle, while AI is experiencing a faster growth trajectory
Semiconductors have a 3-5 year Juglar cycle and are currently experiencing a period of overlapping 28nm production expansion and 14nm breakthroughs. AI computing power, on the other hand, is characterized by a more rapid replacement cycle, with the transition from H100 to B100 lasting only 18 months, resulting in a more compact investment cadence. Investors should prioritize technology sectors with different cadences based on their risk appetite.
- Profitability and Capital Expenditure: AI vendors enjoy higher gross margins and greater investment.
AI server vendors generally have gross margins 15 percentage points higher than semiconductor foundries, but their R&D investment is heavily concentrated on building the software ecosystem. Companies like Cambricon, for example, devote over 60% of their R&D funding to software stack optimization. Meanwhile, TSMC still focuses 70% of its capital expenditure on advanced processes below 3nm. In the long term, the coordinated development of AI software and hardware will be key.
The high valuation risks of tech stocks cannot be ignored
Due to the generally optimistic market outlook for tech stocks, the stock prices of many tech companies may be overvalued. When stock prices are significantly above their reasonable valuations, a shift in market sentiment or a company's performance failing to meet market expectations could lead to a significant correction. Such price fluctuations could potentially result in significant losses for investors.