Tech Market Sees Broad Rebound Amid AI Capex Tension
Last week's tech market saw a broad rebound led by NVIDIA (NVDA.US), Microsoft (MSFT.US), and Meta Platforms (META.US) with gains of 11.56%, 7.59%, and 6.36% respectively. Alphabet-A (GOOGL.US) was the only name to slip marginally at 0.51%. The tech industry's AI capex 'arms race' and market scrutiny of returns have created tension. Microsoft and Google's robust cloud revenue growth validated their investment thesis, but the layoff rate hitting a 20-year high has fueled concerns about AI replacing human labor.
The Software sector saw strong rotation with names including Atlassian (TEAM.US) leading gains at 47.57%. The RRG shows numerous software stocks in the Improving quadrant with upward 5-week trajectories, indicating capital migration from hardware to software applications. Crowdstrike (CRWD.US) and Palo Alto Networks (PANW.US) showed high relative strength but momentum fell below 100.
The Hardware sector saw a dramatic divergence pattern of 'high-flyers pulling back alongside laggards catching up'. NVIDIA, Applied Materials (AMAT.US), and Cisco (CSCO.US) remained in the Leading quadrant but with downward trajectories. Micron Technology (MU.US), Marvell Technology (MRVL.US), Advanced Micro Devices (AMD.US), and Intel (INTC.US) collectively fell into the Weakening quadrant.