Tech Weekly: Q2 Ends on High Note in Short Trading Week

This week's tech sector performance

This week delivered a mixed bag in the stock market as the second quarter came to a close, and US and Canadian markets saw shortened trading weeks in observance of national holidays.

On Sunday (June 28), Iran and the US once again agreed to halt hostilities in the Gulf and renew talks, sending Wall Street and TSX futures into positive territory on Monday (June 29).

US stocks ended sharply higher, aided by a rise in SpaceX (NASDAQ:SPXC) shares after the Nasdaq said the company will be added to the Nasdaq-100 (INDEXNASDAQ:NDX) on July 7. Google (NASDAQ:GOOGL) shares also closed higher as the company made its debut on the Dow Jones Industrial Average (INDEXDJX:.DJI).

On Tuesday (June 30), Canada's S&P/TSX Composite (INDEXTSI:OSPTX) secured its eighth consecutive quarterly advance, achieving its longest winning streak since 1996.

Concurrently, major US indexes locked in their most substantial quarterly surges since 2020. After a rocky Q1, Q2 proved to be one of the best quarters for major indexes since 2020. The S&P 500 (INDEXSP:.INX) closed nearly 15 percent higher, and the Nasdaq Composite (INDEXNASDAQ:.IXIC) gained more than 21 percent.

Explosive demand for memory chips and critical supply chain components in the second quarter drove an investment boom in the semiconductor industry, with the PHLX Semiconductor Sector (INDEXNASDAQ:SOX) surging nearly 88 percent, its strongest quarterly gain since 1994.

Investor confidence was reinforced by robust tech sector earnings, despite generally sluggish deal activity outside of SpaceX’s record debut; however, apprehensions surrounding an artificial intelligence (AI) bubble persist.

Although the long-term profit floor remains elevated, strategic attention is transitioning toward the infrastructure enablers required to maintain the current pace of development.

Wednesday (July 1) saw a tech-led reset in the US, while the Canadian markets remained closed for Canada Day. Investors rotated out of semis and AI winners, sending the S&P 500 and Nasdaq both lower on the first trading day of the second half. Heavy selling of computer chips carried over into Asian trading on Thursday (July 2).

Global markets were muted and North American futures mixed ahead of US jobs data, which pointed to a cooling labor market, with job growth slowing in June and payroll gains for the prior two months revised lower.

For now, the data helps ease concerns of future interest rate hikes.

In Canada, mining stocks helped lift markets higher on Friday (July 3), while US markets remained closed for the Independence Day holiday.

3 tech stocks moving markets this week

This week's top tech stock movers, according to TradingView data, were:

1. Axon Enterprise (NASDAQ:AXON)

Axon Enterprise led gains with a 31.36 percent improvement.

2. Palo Alto Networks (NASDAQ:PANW)

Palo Alto Networks saw its share price rise 20.43 percent this week.

3. Datadog (NASDAQ:DDOG)

Datadog saw a gain of 19.41 percent.

Top tech news of the week

• Private aerospace company Rocket Lab agreed to acquire Iridium Communications (NASDAQ:IRDM) for approximately US$8 billion.

• Meta Platforms (NASDAQ:META) rolled out an optional subscription paywall for select premium AI features on its Meta Glasses, as well as co-branded Ray-Ban Meta and Oakley Meta smart glasses. Free access to Conversation Focus, which amplifies the voice of the person you are facing in noisy environments, is now rate-limited to three hours per month. For US$19.99 per month, subscribers to the new Meta One Premium tier gain up to 15 hours of Conversation Focus usage per month along with premium device support. Built-in AI functions like live translation and voice assistants remain entirely free.

• Judson Althoff, CEO of Microsoft's (NASDAQ:MSFT) commercial business, announced the creation of a new business unit on Thursday, geared toward helping large customers set up customized AI applications. Microsoft is investing US$2.5 billion in the effort, Microsoft Frontier, and will assign 6,000 employees. The company just marked its poorest monthly performance since December 2000, closing out June 19 percent lower than its opening trading levels.
• Shares of Meta jumped by over eight percent on Wednesday after Bloomberg reported that the company is building a cloud business to sell AI compute, allowing developers to run AI models hosted on Meta’s infrastructure, such as its closed-weight Muse Spark.

• Bending Spoons (NASDAQ:BSP), the software company and owner of Vimeo and AOL, made its US market debut on the Nasdaq on Wednesday. Its share price rose almost 40 percent before pulling back.

• OpenAI CEO Sam Altman is reportedly in early talks with the US government over a plan to give the American public a 5 percent equity stake in OpenAI via a public wealth fund modeled on the Alaska Permanent Fund. Under the proposal, the fund would hold the equity and distribute returns to citizens, giving them a direct financial stake in AI’s success.

• SoftBank (TSE:9434) and Softbank Group (TSE:9984) are launching a new US venture, SB Neo, that will rent AI computing resources to US companies beginning in the next fiscal year.

• This week, the US government lifted export controls on Anthropic’s Mythos and Fable models, concluding an 18 day suspension aimed at evaluating diversion risks. Meanwhile, Anthropic launched Claude Sonnet 5 and has reportedly commenced early stage work on a proprietary AI chip, holding discussions with Samsung Electronics (KRX:005930) as a potential manufacturer.

• NVIDIA (NASDAQ:NVDA) is launching a revenue-sharing and credit-support structure for smaller AI cloud providers, backing the capital cost of the GPU clusters in exchange for a share of the cloud revenue generated by those GPUs over time. The deal includes a buyback guarantee of the unused GPUS at an agreed price if the cloud provider fails to sell all the GPU capacity. The first two public partners under this model are Firmus Technologies, a company building a DSX‑aligned AI factory in Batam, Indonesia, and Sharon AI (NASDAQ:SHAZ), a Nasdaq-listed company planning to deploy up to 40,000 NVIDIA Grace Blackwell GB300 GPUs in Australia.

• Amazon Web Services is investing US$1 billion to launch a new Forward Deployed Engineering unit that will embed specialist AI engineers directly inside customer organizations to help enterprises build and integrate self‑sufficient AI systems. Initial customers include the NFL, NBA, Ricoh and the Allen Institute.

• The Information reported this week that OpenAI found optimizations that cut ChatGPT inference costs by more than 50 percent for guest users, allegedly reducing required Nvidia GPUs to around 200. The SOX slid around six percent on Thursday as a result.

Tech ETF performance

Tech exchange-traded funds (ETFs) track baskets of major tech stocks, meaning their performance helps investors gauge the overall performance of the niches they cover.

This week, the iShares Semiconductor ETF (NASDAQ:SOXX) lost 5.75 percent, while the Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) lost 6.24 percent.

The VanEck Semiconductor ETF (NASDAQ:SMH) erased 4.02 percent.

Tech news to watch next week

Investors will be focused on two high-impact macro releases next week.

Minutes from the Federal Reserve’s June 16 to 17 meeting will be released on July 8, and are expected to provide the first detailed look at deliberations under Chair Kevin Warsh. Additionally, the July 9 employment report will test whether June’s hiring slowdown is a one-off, or the start of a broader cooling trend after a spring surge.

This week’s soft jobs print already cut odds of a September rate hike, pushed treasury yields lower and lifted equities around the world; next week’s data will determine whether that narrative holds or is quickly reversed.