As the mid-year earnings season draws to a close, the market has largely digested the first-half performance results from the optical module sector. Meanwhile, the ChiNext AI ETF Huabao (159363), which focuses on leading optical module companies, has seen a steady rise in investor attention. Rather than dwelling on past profitability, the more pressing question is whether these companies can sustain product deliveries through the second half and into next year. The answer does not lie in the income statement, but in two often-overlooked accounting items: prepayments and inventory. In this year's interim reports, these two figures reveal more about actual delivery capacity than earnings guidance.

Decoding the Delivery Signal: Prepayments and Inventory as the Supply Chain Arsenal

In the high-speed optical module industry, assessing a company's ability to sustain shipments requires looking beyond current revenue to the supply chain resources already committed but not yet converted into income. The leading indicators are prepayments and inventory, excluding goods in transit. First, prepayments represent funds paid for goods not yet received, essentially locking in upstream production capacity. With core components remaining in tight supply, companies must prepay to secure their allocation, making this the most forward-looking signal of sector momentum. Second, inventory excluding goods in transit comprises materials, work-in-progress, and finished goods already stored; while goods in transit remain on the books under inventory, they have left the warehouse and cannot be used for future stocking, so excluding them reveals the true scale of delivery reserves on hand. Based on this logic, Guosheng Securities notes that the formula 'prepayments plus inventory minus goods in transit' captures resources that have consumed capital but are not yet recognized as revenue, or the locked-in supply chain capacity that can be viewed as the ammunition reserve for future deliveries.

Module Makers: Unprecedented Stockpiling with Clear Advantages for Market Leaders

Examining data from major module manufacturers for the first half of 2026 reveals two striking patterns. Prepayments have generally surged, confirming the certainty of industry demand; with core component supply remaining tight, companies must prepay to secure capacity, essentially trading current cash flow for guaranteed future deliveries. Additionally, top-tier manufacturers hold significantly larger stockpiles; in an environment of persistent material shortages, large-scale inventory building itself constitutes a competitive moat, giving leading firms a clear edge in ensuring timely deliveries. Furthermore, introducing the 'inventory coverage months' metric, calculated as inventory on hand and in production divided by average monthly operating costs, to gauge the cushion depth: leading players generally maintain roughly half a year of continuous production support, with Eoptolink at approximately 5.5 months and Zhongji Innolight at about 4.6 months, reflecting an aggressive stocking posture.

Crunching the Numbers: Two Leaders with Potential Deliveries Exceeding 28 Million Units

A more hard-nosed calculation uses 'inventory on hand and in production divided by unit cost, plus finished goods inventory divided by average selling price, plus prepayments divided by unit cost' to estimate near-term deliverable module counts. Based on first-half 2026 figures, Zhongji Innolight comes to roughly 16.76 million units, while Eoptolink reaches about 11.97 million units, for a combined potential of over 28 million units. Guosheng Securities points out that the aggregate potential deliverable modules from these two leading optical module manufacturers surpass 28 million units, with ample on-hand reserves providing solid material support for sustained shipments through the second half and into next year, further validating the delivery certainty of leading companies amid strong industry tailwinds.

Beyond the Books: Nvidia's Earnings Provide Corroborating Evidence

The robust outlook for optical modules is not confined to balance sheet metrics. Nvidia's latest earnings report offers the most direct confirmation, with fiscal second-quarter 2027 revenue hitting $96.221 billion, up 106% year over year, and data center revenue reaching $89 billion, a 117% increase. More critically, the company issued forward guidance for fiscal 2028 revenue growth of approximately 70% year over year, and management acknowledged on the earnings call that unconstrained real market demand could reach double the current level, with supply chain capacity being the sole constraint on annual growth. The giant's only bottleneck is production capacity, which is precisely why upstream players are racing to lock in supply. As optical modules serve as the critical link for data exchange in compute clusters, the more Nvidia sells, the more rigid the demand for optical modules becomes; this transmission chain is straightforward and direct.

Investment Vehicle: ChiNext AI ETF Huabao (159363)

The logic is now clear: the strong momentum in optical modules rests on a triple confirmation of prepayments securing capacity, inventory providing a safety cushion, and industry giants raising the ceiling, with resources increasingly concentrating among top players. However, for retail investors, betting on individual stocks entails risks from valuation swings, technology shifts, and misjudging the right track. A more convenient approach is to gain exposure through a high-optical index tool. The ChiNext AI ETF Huabao (159363) stands squarely in the spotlight, focusing on optical module and CPO leaders, with its underlying index composed of over 35% Zhongji Innolight, Eoptolink, and TFC Communication, making it a core flag bearer for AI compute power. It also covers AI application directions, driven by both compute and applications. Feeder funds are available as Class A (023407) and Class C (023408). Data sources include the Shanghai and Shenzhen stock exchanges and Wind. As of August 31, 2026, according to Guozheng Index, the top three constituents of the ChiNext AI Index are Eoptolink at 12.61%, Zhongji Innolight at 11.99%, and TFC Communication at 10.25%. Investors should note that market volatility may be elevated in the near term, and short-term fluctuations do not predict future performance. Please invest rationally based on your own capital situation and risk tolerance, with close attention to position and risk management. Institutional views reference Guosheng Securities' report on decoding delivery signals from prepayments in interim reports. For ETF fees, subscription and redemption agents may charge commissions up to 0.5%, while on-exchange trading fees follow actual brokerage charges with no sales service fee. For feeder funds, Class C incurs no subscription fee, with redemption fees of 1.5% within 7 days and 0% after, plus a 0.3% sales service fee; Class A charges 1% for subscriptions under 1 million yuan, 0.6% for 1 million to 2 million yuan, and 1,000 yuan per transaction above 2 million yuan, with redemption fees of 1.5% within 7 days and 0% after, and no sales service fee. Per fund manager assessment, the ChiNext AI ETF Huabao carries a risk rating of R4, moderately high risk, suitable for aggressive investors rated C4 and above, with suitability opinions subject to sales institutions. Risk disclaimer: The fund passively tracks the ChiNext AI Index, with a base date of December 28, 2018, and a release date of July 11, 2024; annual returns from 2021 to 2025 were 17.57%, -34.52%, 47.83%, 38.44%, and 106.35%, with annualized volatility of 23.73%, 27.34%, 38.02%, 45.42%, and 41.1% over the same periods. Index constituent composition adjusts per index rules, and backtested historical performance does not predict future index returns. Index constituents shown are for illustrative purposes only, and individual stock descriptions do not constitute investment advice of any form, nor do they represent holdings or trading activities of any fund under the manager. Any information appearing herein, including but not limited to stocks, commentary, forecasts, charts, indicators, theories, or any form of expression, is for reference only, and investors bear full responsibility for their own investment decisions. Furthermore, any views, analyses, or forecasts herein do not constitute investment advice to readers, nor do they assume liability for direct or indirect losses arising from use of this content. Fund investment carries risks; past performance does not guarantee future results, and the performance of other funds managed by the manager does not constitute a guarantee of fund performance. Please invest in funds with caution.