BlockBeats reported on Aug. 3 that Oriental Harbour Chairman Dan Bin shared a view from Morgan analysts earlier in the day, saying the chip sector’s steep July sell-off and heavy leveraged liquidations were part of a necessary deleveraging process in a much bigger AI cycle. The note described that level of pullback as both unavoidable and healthy for the market.
According to the shared view, the market still has not fully understood the scale of demand potential for AI as an “intelligence” product. Concerns over capital spending by major companies were compared with the early story around Amazon Web Services, but the analysts argued that the AI opportunity is far larger.
Capital rotating back to higher-quality tech names
The note said capital is moving out of lower-quality technology stocks and back into higher-quality names. It said that shift supports its call for a “return of the king” by the end of 2026. At the same time, it said storage chips still face cyclical risk and high volatility, making it better to wait for a technical repair.
On specific names, the view was more constructive on Nvidia, Broadcom and TSMC because of their stronger fundamentals. It also said more capital would move toward higher-quality application-layer companies.
August outlook for the Nasdaq
The shared commentary also said hyperscale cloud providers are seeing faster business growth, with reserve order books remaining large and still accelerating. In that reading, the market’s earlier punishment of capital spending was a misjudgment, and those investments are expected to turn into more certain future revenue.
Looking ahead to August, the analysts said the Nasdaq rebound may continue until Nvidia’s earnings report. They added that the rolling adjustment across the technology sector is close to ending and that capital is returning more quickly to higher-quality tech stocks.
Trading view on chips and memory
For sector positioning, the note said investors should not blindly chase gains in chip and storage, or memory, shares at current levels. Instead, it suggested buying on dips for short-term swing trades until the storage segment clearly forms a bottom on a technical basis.