YOFC shares tumbled 5.03% intraday on Wednesday, extending a steep decline that has halved the stock's value from its June peak, as the optical communications sector continued to face heavy selling pressure.

The sharp drop was driven by persistent concerns over an industry-wide capacity expansion wave. CLSA recently downgraded YOFC from Buy to Hold, projecting global fiber optic capacity to surge 69% by 2028 and warning that the company faces market share erosion risk, with earnings in the near two years likely representing a cyclical peak. Multiple firms including Hengtong Optic-Electric and FiberHome have announced preform expansion plans, intensifying supply-side pressure and weighing on investor sentiment.

While Morgan Stanley maintains a 230 HKD target price, emphasizing that the AI-driven fiber super-cycle earnings trajectory remains intact, short-term sentiment continues to be suppressed by supply expansion expectations and concerns over circular financing risks tied to AI infrastructure spending.