Summary of Key Points
ChangXin Technology is set to list on the STAR Market on July 27th, and there are significant divergent views in the market regarding its stock price performance after listing. On one hand, the company has shown impressive recent growth in earnings, and its issuance valuation is relatively reasonable compared to its peers. On the other hand, the global technology sector (especially the AI industry chain) is in a period of adjustment, raising doubts about the sustainability of AI-related capital expenditures. Coupled with the strong cyclical nature of the storage industry, it is generally believed that the company's stock price will likely see a "prudent valuation and moderate trading" pattern, rather than a sudden surge.
1. Global Technology Sector Cooling Down: Divergence in the AI Industry Chain
In the past half month, stocks related to semiconductors and storage have been declining. Initially, there was optimism that AI would drive the entire industry chain, but now the market has become more cautious. The clamor for continuous increases in storage prices has subsided, as many believe that excess profits will return to normal levels after major companies expand their production.
For example, six of the largest American tech companies underperformed the NASDAQ index in the first half of this year: Microsoft fell by 22%, and Meta by 14%. This indicates market concerns that the rapid growth in AI-related capital expenditures is outpacing short-term profits. Additionally, downstream manufacturers in sectors such as smartphones and electric vehicles are struggling with rising costs, and consumers are less willing to pay for expensive products, which could slow down the pace of AI investment.
2. ChangXin's Fundamental Strengths: Surging Earnings, but Reasonable Valuation
ChangXin's issuance price is 8.66 RMB per share, with a total market value of nearly 580 billion RMB after listing. Looking at its financial performance: in the first quarter of 2026, revenue reached 50.8 billion RMB, and net profit after deducting non-recurring items was 26.3 billion RMB, representing year-over-year increases of 7 times and 20 times, respectively. Revenue for the first half of the year is expected to be between 110-120 billion RMB, with profits ranging from 50-57 billion RMB, showing even more impressive growth (22-25 times).
However, compared to its peers, ChangXin's valuation is not excessively high. The PE (Price-to-Earnings) ratios for Samsung, SK Hynix, and Micron range from 5 to 8 times, while their PB (Price-to-Book) ratios are between 2 and 6 times. ChangXin's PE ratio of 5 times and PB ratio of 3 times fall in the middle to lower range. Therefore, whether its stock price will rise in the future depends on its ability to maintain its competitive edge in research and development and operations.
3. Concerns about AI Capital Expenditures: The Balance Between Supply and Demand Could Shift at Any Time
AI has been a major driver of the storage demand surge, but there are two issues:
- Supply Side: Major companies are aggressively expanding production. SK Hynix recently raised $26.5 billion to build three new facilities; Samsung has moved up the launch timeline for its wafer factories by 1-2 years; Micron plans to invest $27 billion in new factories in 2026. These capacities will be available in 2-3 years.
- Demand Side: Storage prices have risen sharply, putting significant pressure on downstream companies (such as those producing servers and smartphones). Moreover, the practical applications of AI are not yet fully established, and there is uncertainty about whether companies like Micron can maintain their high profit margins (around 85%). Even if there is still a supply-demand gap, prices are unlikely to continue rising at current rates.
4. The "Cyclical Curse" of the Storage Industry: Stock Prices Are Likely to Rise Gradually
The storage industry is highly cyclical, with prices fluctuating dramatically. For example, from 2015 to 2025, DRAM (memory chips) prices ranged from a high of $7.89 per GB to a low of $1.78 per GB, a difference of more than four times. Historically, the cycle has repeated: price increases lead to profits, which in turn drive expansion, followed by overcapacity and price declines.
Expansion is a significant investment—building a storage wafer factory costs billions of dollars, and it takes at least 2-3 years to reach full production capacity. Therefore, even though the current cycle is driven by AI, stock prices are unlikely to reflect all future expectations from the moment of listing. It is more realistic to expect gradual increases that align with company performance and industry trends.
Conclusion
After ChangXin Technology lists, its stock price is not expected to soar like that of some new stocks. On one hand, the company has solid financial fundamentals and a reasonable valuation, providing support for its stock price. On the other hand, the global technology sector's adjustment, the uncertainty around AI capital expenditures, and the cyclical nature of the storage industry will make the market more cautious. The ultimate direction of the stock price will depend on ChangXin's ability to maintain its competitive position during the expansion phase and whether AI-related demand can truly continue to grow sustainably.