Disappointing “Red May” Raises Hopes for a June Turnaround
As the anticipated “Red May” market rally failed to materialize, investors are now pinning their hopes on June to deliver stronger performance for A-shares. Particularly, retail investors are closely watching whether tech stocks can emerge as the market’s driving force. The first trading week of June has shown tentative signs of revival in the tech sector.
Two Catalysts Fueling Market Optimism
Market expectations are primarily driven by two landmark events: Nvidia’s stealthy ascent to become the world’s most valuable company, and China Mobile briefly surpassing Industrial and Commercial Bank of China (ICBC) as the A-share market’s capitalization leader.
Nvidia’s Meteoric Rise to Global Dominance
On Tuesday U.S. time, Nvidia’s stock rose nearly 3%, allowing it to overtake Microsoft again as the world’s most valuable company by market capitalization. Since early April, Nvidia’s shares have surged over 60%, powered by stellar financial performance.
The chipmaker’s Q1 FY2026 earnings report (covering the natural year period from January 26 to April 27, 2025) revealed revenue of $44.062 billion (up 69% YoY), net income of $18.775 billion (up 26% YoY), and diluted EPS of $0.76 (up 27% YoY). These results came despite a $4.5 billion inventory write-down, demonstrating sustained strong demand for AI training from large model development and AI application scenarios globally, alongside rapidly growing inference requirements. The figures reinforce the continued validity of AI industry’s growth narrative.
China Mobile’s Capitalization Milestone
In another symbolic development, China Mobile temporarily dethroned ICBC as the A-share market’s most valuable company this week (though it slipped back to second place Friday due to dividend adjustments). The two giants have been alternating positions since last year in their battle for market cap supremacy.
While both companies’ valuations have hovered around 2.5 trillion yuan this year with modest gains, China Mobile appears better positioned for long-term growth. Comparative analysis reveals three telling indicators:
- Performance: China Mobile gained 25% last year versus ICBC’s 56%, suggesting catch-up potential
- Fundamentals: China Mobile posted positive revenue and profit growth in Q1 2025 while ICBC saw declines
- Shareholder Returns: China Mobile offers 75%+ cash dividend payout (4% yield) versus ICBC’s 30% payout (4.3% yield)
China Mobile’s ability to maintain high payouts reflects strong cash generation. When combined with upcoming 6G and computing power internet advancements, the telecom operator’s growth prospects clearly outshine traditional banking.
Implications for Tech Sector Performance
These developments carry significant implications for June and beyond in tech stocks:
The AI Revolution’s Hardware Demands
Nvidia’s ascendancy confirms robust global demand for large AI models and intelligent agents. The transition from research-oriented training to practical inference applications will exponentially increase computing power requirements.
AI agents represent artificial intelligence’s ultimate application – capable of perception, reasoning, task planning, and execution. Current large models remain limited to Q&A and content generation, while AI agents can “think and act” simultaneously through environmental perception, autonomous decision-making, and deep learning. This operational capability creates genuine AI service scenarios for humanity, requiring orders of magnitude more computing power than large language models and further driving infrastructure development.
This optimism has already fueled rebounds in AI hardware and computing power leasing concepts. Leaders like TAI-Chen Guang (30% weekly gain) in AI hardware and Qingyun Technology (38% weekly gain) in computing power leasing have surged, with Beijing Exchange’s AI agent concept stock Luqiao Information jumping over 110% in two weeks.
China Mobile’s Potential Leadership Role
Should China Mobile consolidate its position as A-shares’ valuation leader, it could benefit large-cap tech stocks. Historically, A-shares’ leading sectors have rotated every 3-5 years – from liquor to banking – each with distinct characteristics.
The liquor-dominated era emphasized consumer themes across beverages, pharmaceuticals, appliances, retail, and real estate. The banking era focused on high-dividend plays across financials, utilities, and infrastructure. However, neither sector truly represented cutting-edge technological progress, which remains the primary productive force for sustainable development.
If China Mobile assumes market leadership, it could catalyze the rise of large, competitive tech companies with proprietary technologies. Such a sector’s emergence would represent the “hard power” enabling A-shares to compete effectively in global markets.
Conclusion: Tech’s Transformative Potential
The parallel narratives of Nvidia’s global dominance and China Mobile’s domestic leadership highlight technology’s central role in shaping economic futures. While June’s market trajectory remains uncertain, these developments suggest structural shifts favoring innovative, high-growth tech companies over traditional cyclical plays. Investors would do well to monitor whether these early signals evolve into sustained trends that redefine market leadership for the coming decade.
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