Memory Chips Defy the Tech Selloff — Is Wall Street Reassessing the Sector?

Ryan-港美价值投资

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🌐 From 'Hard Compute Monopoly' to 'Space-Based and Physical Infrastructure'! Behind Microsoft and Meta's massive spending, two high-margin, high-market-share AI physical infrastructure players are entering a generational position-switching opportunity!

Let’s discuss the market situation on the first trading day of this month: standing at the historic juncture of June 1, 2026 (the first trading day of June), U.S. equities witnessed an extremely profound structural surge. Memory chip giants such as Micron Technology and Western Digital/SanDisk rallied sharply, while AI software applications staged a strong rebound after undergoing valuation compression in May.

This reveals an undeniable capital consensus: AI investment is undergoing a comprehensive and profound asset reallocation—from a 'single-compute monopoly (dominated by NVIDIA)' toward 'AI infrastructure enablers (power, cooling, high-speed networking, ultra-fast storage).' AI infrastructure is now officially becoming a core defensive and offensive asset class for global capital.

🏗️ Core Macro Outlook: The Strategic Significance and Future Opportunities as AI Infrastructure Becomes a Core Asset

1. Critical Role in Future Industrial Development

1.1 Overcoming the Physical Limits of the 'Law of the Barrel': The growth of computing power (GPUs) is not built on sand. The next-generation ultra-large AI clusters, set to enter mass production by the end of 2026, will each consume power at the megawatt (MW) scale. Without extreme power management and liquid cooling, these chips are just scrap metal; without HBM4 and flash memory arrays, computing power hits a 'memory wall'; and without ultra-high-speed optical switches, multi-GPU interconnects suffer severe signal latency. Infrastructure forms the physical foundation determining whether AI can be practically deployed.

1.2 Restructuring Valuation Paradigms: Capital markets are no longer buying just 'AI stories'—they’re paying for 'order visibility, delivery capacity, and free cash flow.' Infrastructure companies now enjoy 2–3 years of highly visible order backlogs, giving them both the growth elasticity of tech stocks and the stability of utilities.

2. Hidden Opportunities in This Sector Going Forward

2.1 Space-Based Edge AI Infrastructure: As we previously analyzed, low-Earth-orbit satellite Direct-to-Device (D2D) broadband networks represent a physical extension of terrestrial infrastructure into space, ensuring AI devices remain perpetually online—even in the most remote corners of the globe.

2.2 Nuclear/Green Power Directly Supplying Data Centers (SMRs): As grid capacity reaches its limit, commercial deployment of small modular reactors (SMRs) directly coupled with hyperscale AI data centers is poised for explosive growth.

2.3 Silicon Photonics and Co-Packaged Optics (CPO): Traditional copper cabling faces physical bottlenecks. Starting in 2026, optical communication technologies will see a steep adoption curve within infrastructure layers.

👑 Part Two: In-Depth Research Report on Two Core Dark Horse Players in AI Infrastructure

We have precisely identified for Futu fellow investors two absolute leaders with the strongest moats in thermal/power infrastructure and high-speed optical networking:

1. Vertiv Holdings (NYSE: VRT) — Global undisputed leader in AI liquid cooling and precision power systems.

2. Arista Networks (NYSE: ANET) — The networking giant shattering NVIDIA's InfiniBand monopoly and dominating Ethernet in AI data centers.

📊 Dark Horse #1: Vertiv Holdings (NYSE: VRT) — The 'undisputed king' of AI liquid cooling

1. Business segment growth trajectory and the importance of AI infrastructure enablers

1.1 Growth Trajectory: Vertiv is the world’s largest supplier of precision air conditioning, liquid cooling systems, and critical power systems for data centers. With the large-scale deployment of NVIDIA’s Blackwell platform and higher-density server clusters expected by 2026, per-rack power consumption is surging from 40kW to over 100kW, rendering traditional air cooling completely obsolete. Vertiv’s liquid cooling (Cooling) and high-voltage DC power businesses are now on a steep, second-order exponential growth curve.

1.2 Enabler Importance: The ultimate bottleneck in scaling AI computing power is thermal management and power delivery. Vertiv doesn’t provide software—it supplies indispensable physical hardware, making it a classic 'pick-and-shovel seller in the AI gold rush.'

2. Cash Flow Position and Overall Operational Strength

2.1 Cash Flow Fortress: Thanks to its strong pricing power, Vertiv demonstrated remarkable cash conversion in its latest Q1 2026 earnings report, with operating cash flow turning solidly positive and free cash flow (FCF) conversion exceeding 90%.

2.2 Operational Excellence: The company operates the world’s most extensive data center service network and is an officially designated core thermal solutions partner of NVIDIA. Its globally integrated supply chain enables synchronized capacity expansion across North America, Europe, and Asia, resulting in exceptional operational efficiency.

3. Deep Dive into Overall Valuation Reasonableness as of June 2026

3.1 Revenue and Market Share: Vertiv currently holds over 35% global market share in the high-end liquid cooling segment for hyperscale data centers, placing it in an undisputed leadership position.

3.2 Margins and Leverage: Adjusted operating margin in Q1 2026 reached a record high of 18.5%. Although the company historically carried some leverage, it has significantly deleveraged over the past two years using strong cash flows, bringing net debt/EBITDA down to a very healthy 1.8x.

3.3 Bottlenecks and Supply Chain: The only current bottleneck is insufficient production capacity to meet demand. Order visibility is fully booked through 2027, and there is an industry-wide shortage of certain core components (e.g., liquid-cooled quick-disconnect couplings). However, Vertiv Holdings, thanks to its robust supply chain scale, is ramping up capacity significantly faster than smaller competitors.

3.4 Institutional Sentiment and Retail Concentration: Wall Street bullish sentiment is extremely high. Top-tier institutions like Goldman Sachs and Morgan Stanley continued raising their price targets as of the end of May. Futu’s institutional capital flow indicator shows that shares are highly concentrated in long-term institutional hands (holding over 80%), with minimal retail float—indicating strong downside resilience for its stock price.

3.5 Valuation Reasonableness: Its current forward P/E ratio stands at approximately 38–42x. Compared to its robust ~40% compound profit growth rate (resulting in a PEG ratio near 1), this valuation is highly reasonable for an infrastructure asset and shows no signs of being bubbly.

🌐 Dark Horse #2: Arista Networks (NYSE: ANET) — The Networking Kingpin Solving AI Infrastructure Bottlenecks

1. Business Segment Growth Trajectory and the Importance of AI Infrastructure Ecosystem Support

1.1 Growth Trajectory: Arista specializes in high-performance switches for hyperscale data centers. In 2026, the entire AI industry is undergoing a historic shift—from NVIDIA's expensive proprietary protocol (InfiniBand) toward open ultra-high-speed Ethernet (Ultra Ethernet Consortium, UEC). As a founding member and core leader of UEC, Arista is experiencing explosive order growth in its 800G and soon-to-be-mass-produced 1.6T switch segments.

1.2 Ecosystem Importance: Training and inference for AI multimodal large models heavily rely on parallel computing. If network transmission speed is inadequate or packet loss occurs, GPUs fall idle waiting (Tail Delay). Arista’s EOS network operating system and hardware architecture provide the only viable solution to eliminate this 'network bottleneck.'

2. Cash Flow Position and Overall Operational Strength

2.1 King of Net Cash: Arista boasts one of the cleanest balance sheets among U.S. tech stocks. The company maintains zero long-term debt and holds over $6 billion in cash and short-term investments—an almost terrifying level of risk resilience and financial firepower.

2.2 Comprehensive Strength: Microsoft and Meta are Arista’s two largest shareholders and core customers. A significant portion of these giants’ massive 2026 capital expenditures (Capex) directly translates into Arista’s revenue.

3. June 2026 Updated Assessment of Overall Valuation Reasonableness

3.1 Revenue and Profit Margins: Q1 2026 revenue grew by over 22% year-over-year, with gross margins consistently maintained at an exceptional level of 64%–66%, and net profit margin surpassing 30%.

3.2 Market Share: In the high-end data center switch market for 100G/400G/800G, Arista Networks stands alongside Cisco. However, in the AI cloud market, Arista’s market share exceeds 40%.

3.3 Bottlenecks and Supply Chain: The primary growth bottleneck lies in the allocation of advanced networking chip manufacturing capacity from Taiwan Semiconductor and Broadcom. However, as capacity eases in the second half of 2026, its order fulfillment rate is rapidly improving.

3.4 Institutional Sentiment and Retail Concentration: Institutional ownership exceeds 85%, while retail investor concentration remains low, resulting in an exceptionally stable shareholding structure. Following its earnings release at the end of May, the stock experienced short-term profit-taking, but rebounded strongly on the first trading day of June alongside the broader tech sector rally.

3.5 Valuation Reasonableness: The current forward P/E ratio is around 35x. Given its debt-free balance sheet and binding orders from Microsoft and Meta, this valuation fully reflects its premium as an industry leader and sits at the lower end of a fair value range, offering a very high margin of safety.

⚡ Part Three: Robust and High-Potential Investment Thesis for Retail Investors in June and This Quarter

1. Core Tactical Logic: 'When one door closes, another opens'—sector rotation within the supply chain

June’s market theme is 'valuation reset.' If NVIDIA trades sideways at elevated levels, capital will not exit the AI space but instead flow into indispensable infrastructure plays. Moreover, SpaceX’s trillion-dollar IPO on June 12 will further focus global attention on space, satellite-based, and physical infrastructure.

1.1 Stability: Both VRT and ANET are backed by hard-capped capital expenditures from hyperscalers like Microsoft, Meta, Google, and Amazon—regardless of which AI software ultimately wins, these companies continue to collect their 'tax.'

1.2 Upside Catalyst: In mid-June, the official shipment of Blackwell liquid-cooled servers and large-scale collective procurement of 800G Ethernet switches will directly ignite catalysts for these two companies.

2. Specific trading advice for moomoo users

2.1 Underlying stock position strategy: Adopt a 'staged right-side follow' approach. The strong rally on the first trading day of June confirmed a short-term bottom. Fellow investors can gradually accumulate positions on dips toward the 5-day or 10-day moving averages. Avoid going all-in at once. I recommend initiating a light position near $320 (VRT) (around 10–15% of your portfolio). For ANET, if it pulls back to the 30-day moving average, consider staged buying. If entering at market price, keep the position size under 10% to preserve flexibility for further accumulation on subsequent pullbacks. I’m particularly bullish on these two stocks in June—they’re primed for explosive upside this month, with potential returns of at least 50%!

2.2 Options hedging strategy: Given the extremely high earnings visibility of both stocks, consider setting up a slightly out-of-the-money Bull Call Spread in early June, expiring at the end of this quarter (July/August), to leverage the upside with controlled risk and capped maximum loss.

2.3 Hard risk control threshold: If the Fed’s mid-June FOMC meeting delivers an unexpectedly hawkish signal that triggers a systemic market collapse, and the underlying stocks decisively break below their 50-day moving average (MA50) with a drop exceeding 10%, retail investors must strictly enforce hard stop-loss discipline.

📲 Micron and SanDisk surged violently! On the first trading day of June, massive capital rotation occurred—AI infrastructure is shifting decisively toward 'core assets,' and these two 'shovel-selling' giants have already been quietly cornered by institutional players!

🚀🔥 MOO friends, did you decipher the market’s opening move on the first trading day of June?

Micron, Western Digital/SanDisk, and other memory/storage stocks were violently bid up at the open with huge volume, while AI software applications—which suffered heavy pressure in May—also staged a collective rebound! This sends an extremely strong signal: AI investing is moving beyond 'NVIDIA’s sole dominance in compute power' and entering a golden new phase of broad-based breakout in 'AI infrastructure enablers' (liquid cooling, power delivery, ultra-fast interconnects, and high-performance storage)!

Institutional capital isn’t retreating—it’s executing an extreme reallocation across the entire supply chain! AI infrastructure is now officially becoming the hardest-core 'core asset' in the tech sector for the second half of 2026.

If you accurately held Lenovo Group (revenue surged 27%) or Micron Technology (HBM capacity fully booked) as a fellow investor in May, your focus in June must shift to these two 'uncrowned kings' of infrastructure—stocks generating explosive discussion in the Futu community, yet whose true potential has only just begun to unfold!

🎯 Giant #1: Vertiv (NYSE: VRT)—the 'liquid cooling lifeline' for the 100kW+ chip era!

When NVIDIA’s Blackwell platform fully rolls out in 2026, single-rack power consumption will surge past the physical limit of 100kW, rendering traditional air cooling completely obsolete. Without Vertiv’s high-voltage DC power and precision liquid cooling, even the most powerful GPUs will be nothing but burning scrap metal!

1. Hard-core data: Vertiv holds over 35% global market share in advanced liquid cooling for hyperscale data centers! Its latest 2026 earnings report shows an operating profit margin hitting a record high of 18.5%, with net debt/EBITDA down to a healthy 1.8x.

2. Fellow investor expectation gap: The only current bottleneck is production capacity lagging behind order growth—order visibility extends all the way into 2027! In late May, Wall Street institutions aggressively raised their price targets. Institutional ownership metrics show long-term institutional control exceeding 80%, indicating an extremely stable shareholding structure. Currently trading at only ~40x forward P/E with a PEG ratio near 1—there’s simply no bubble!

🌐 Giant #2: Arista Networks (NYSE: ANET) — The undisputed 'AI Networking King' smashing proprietary protocols!

What do large model training workloads fear most? Network packet loss that leaves GPUs idle. In 2026, the entire AI industry is undergoing a historic shift—from NVIDIA’s expensive InfiniBand to open, ultra-high-speed Ethernet (UEC). And Arista is the absolute leader of this transition.

1. Hard-core data: The company maintains zero long-term debt and sits on over $6 billion in net cash! Gross margins remain at an exceptional 64%–66%, with Microsoft and Meta as its largest shareholders and core customers.

2. Fellow investor expectation gap: After its late-May earnings report, the stock experienced a technical pullback—creating a golden right-side entry opportunity on the first trading day of June. With explosive 800G switch deliveries expected in Q3, Arista is currently trading near the bottom of its valuation range (forward P/E of 35x), offering extremely high margin of safety!

👇 Fellow investors, let’s debate in the comments below 👇

Storage stocks surged across the board today, with institutional money continuing to flow into AI infrastructure names VRT and ANET! With SpaceX’s $2 trillion IPO set to shake markets on June 12, will you decisively reallocate your portfolio in early June to position in these two 'AI infrastructure cash cows,' or stick with the storage chips and AI software stocks that made you big gains in May? Who will be the true top-performing U.S. stock in Q3 2026? Share your hard-core holdings, long/short views, or options strategies in the comments—we’ll tackle this infrastructure capital feast together as a community! 🧐👇

#USMarketJuneOutlook #AIInfrastructure #Vertiv #VRT #Arista #ANET #MicronTechnology #StorageChips #LiquidCooling #Switches #MOOMOOCommunityDebate #ShortTermStrategy #HardcoreRiskControl #SpaceXIPO

$Micron Technology (MU.US)$

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Still bullish on Micron Technology; watch for pullbacks, as they present good entry opportunities. The first target this month is $1,500!

$Vertiv Holdings (VRT.US)$

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I think Vertiv Holdings (VRT) is a good candidate for a small position at current prices; increase your position on pullbacks—don’t miss this opportunity. Expecting a 50% return.

$Arista Networks (ANET.US)$

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Infrastructure-supporting companies have significant potential. Enter positions at suitable prices and hold quietly—expecting a strong rally this month!

The above content reflects personal views only and should not be used as investment advice. If you like this post and my insights, feel free to follow, like, and bookmark! [fist][fist][smile][smile]

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