GF Securities: A-Share Tech Stock Correction Sufficient in Magnitude, but Slightly Insufficient in Duration
Alina Collins
GF Securities reviewed 35 historical corrections and concluded that A-share tech stocks have fallen enough in magnitude but corrected too fast — the market still needs time to digest, and the upcoming earnings season is the next checkpoint.
How far and how long do tech corrections usually run?
GF Securities studied 13 thematic lines and 35 corrections since 2012, arriving at two benchmarks: an average drawdown of about 19% over roughly 21 trading days.
This means → these numbers are the historical yardstick — any current pullback is measured against them.
The current A-share tech drawdown already matches the 19% average, but the decline came unusually fast. In plain terms = the price drop is done, but the market hasn't had enough time to work through its disagreements.
What does the US picture look like?
GF's data since 2023 shows US corrections average about 40 trading days — nearly double the A-share norm.
Average drawdowns: S&P 500 -8.8%, Nasdaq -12.0%, MAG7 — the seven mega-cap tech names — -13.4%, Philadelphia Semiconductor Index -17.6%.
The SOX index has already fallen as much as 16% from its late-June peak, close to the -17.6% historical mean. The magnitude is nearly there, but time-wise more digestion may be needed here too.
How is this AI rally different from past bubbles?
GF compared the current AI investment cycle to the 2015 ChiNext leverage-driven bull and the late-1990s dot-com bubble, concluding the three are structurally different.
The 2015 rally was fueled by margin lending and collapsed once regulators cracked down; the dot-com bubble's late stage was propped up by the "Y2K" narrative — massive IT spending driven by fears of a millennial computer meltdown — and burst once the calendar turned.
This AI cycle is characterized by "frame-by-frame verification": the market tracks model upgrades, hardware iterations, and capex returns in near-real time. There is no grand narrative inflating a bubble, and no heavy leverage. This reflects a correction driven by normal disagreement, not a bubble popping.
What should investors watch next?
GF expects AI investment to follow a "two steps forward, one step back" pattern over the medium term. In plain terms = a steady climb with regular pauses is healthier and more durable than a straight-line surge.
Earnings season is approaching, and many of the industry's open debates will get real data points from company reports.
This means → rather than tracking short-term sentiment swings, earnings data is the decisive checkpoint for whether tech stocks can resume their advance.
Content is for reference only, not financial advice.