Tech Weekly: Tech Stocks Rally on Hopes of Fed Pause

This week's tech sector performance

While Canadian markets were closed on Monday (August 3) for the Civic Holiday, US markets had a broad and sharp rally, driven primarily by falling oil prices after President Trump announced he called off planned military strikes against Iran in favor of resuming diplomatic talks while negotiators worked on a 60-day agreement to keep the Strait of Hormuz open without transit fees.

The technology sector led the broad Wall Street rally following end-of-July volatility. Earnings validation from major cloud providers helped ease fears that AI capital expenditures were unbacked by revenue.

A decline in crude oil prices, which followed indications of easing geopolitical tensions across the Middle East, and earnings from AI-related companies Caterpillar (NYSE:CAT) and Palantir (NASDAQ:PLTR) extended the rally on Tuesday (August 4). The S&P 500 (INDEXSP:.INX) climbed 1.79 percent to a new all-time closing high, buoyed by a 4.1 percent gain in the information technology sector, the best-performing of the benchmark’s 11 major sectors.

On Wednesday (August 5), US markets delivered a mixed performance. Both the S&P 500 (INDEXSP:.INX) and the Nasdaq Composite (INDEXNASDAQ:.IXIC) gave back a portion of their gains from earlier in the week. The tech-heavy pullback was largely driven by earnings reactions in growth names, as sharp drops in SpaceX (NASDAQ:SPXC) and Advanced Micro Devices (NASDAQ:AMD) over heavy AI spending plans dragged down broader tech sentiment.

In geopolitical news, Iran said it reached an agreement with Oman on a proposed route for shipping through the Strait of Hormuz, a potential step toward a reopening of the critical waterway for energy supplies. No US role was mentioned.

Global markets were mixed in cautious trading on Thursday (August 6). Nasdaq futures were in the red, and stocks edged lower in afternoon trading as traders digested the latest company earnings from a mix of industries. In the tech sector, digital ad company AppLovin (NASDAQ:APP) fell nearly 20 percent after reporting mixed results.

A weaker-than-expected US jobs report eased fears of an imminent Federal Reserve rate hike and contributed to an end-of-week rally, again led by tech shares. According to the US payroll report, employment unexpectedly dropped by 23,000 jobs, contrasting with the anticipated 80,000 increase. Analysts noted that this decline provides the Federal Reserve with additional flexibility to maintain current interest rates next month.

The Nasdaq-100 (INDEXNASDAQ:NDX) finished Friday at 29,722.30, a 1.19 percent gain for the day and a 5.11 percent gain for the week.

3 tech stocks moving markets this week

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

1. Palantir Technologies (NASDAQ:PLTR)

Palantir led gains with a 40.66 percent improvement.

2. Shopify (TSX:SHOP,NASDAQ:SHOP)

Canada's Shopify saw a boost of 25.34 percent for the week.

3. Rocket Lab (NASDAQ:RKLB)

Rocket Lab saw a gain of 25.25 percent

Top tech news of the week

• On Monday, officials confirmed the completion of the 30-day pre-release AI security review framework under a June cybersecurity executive order. Following private White House briefings on Tuesday with tech executives, leaked details revealed that closed-source frontier models face a 30-day government review, while American open-weight models are fully exempt. The White House declined to publish the specific review criteria or capability benchmarks. The framework reportedly appears to be designed to facilitate developer-government collaboration to determine coverage, incorporating guidelines on cybersecurity, confidentiality, IP protection, insider risk and pre-release nondisclosure. Reports also indicate the White House informed US AI companies that Chinese open-weight models will be exempt from this testing regime.

• Visa (NYSE:V) agreed to acquire Israeli fraud intelligence company BioCatch for US$2.4 billion in cash. The deal is expected to close in Q2 2027.

• Valar, an LA-based startup focused on building small modular nuclear reactors for data centers, raised US$1 billion in a funding round led by Sequoia Capital.
  
  
• Arthur Hayes, co-founder of Maelstrom and BitMEX, argued that the AI boom is a credit-driven event like 2008, not a dot-com-style earnings story. Lenders finance hyperscalers as technology investments, though the underlying assets resemble real estate.
  Hayes predicts the credit cycle will fail when capex growth plateaus between late 2027 and 2028. When over-leveraged debt defaults, governments in Beijing and Washington will print massive amounts of money to prevent collapse.

• CoreWeave (NASDAQ:CRWV) said it would build three new data centers in Indonesia with a total of 360 megawatts of capacity. They are expected to come online in 2028.

• According to people familiar with the matter, Anthropic PBC signed a six-year, US$10 billion contract for computing capacity with UK-based cloud infrastructure startup Volta Infra Holdings. The NVIDIA (NASDAQ:NVDA)-backed cloud startup recently announced the deal with an unnamed AI lab, to be delivered at a Norway data center in partnership with Bitcoin miner Bitdeer Technologies Group.

• Polymarket is reportedly in early talks to raise capital at a US$20 billion valuation

• Meta Platforms (NASDAQ:META) unveiled a new coding model, Muse Code (beta), on Wednesday alongside its latest AI model, Muse Spark 1.2. Sources for The Information said that Meta’s Muse Spark 1.1 model breached the systems of a company and made changes to its internal systems during cybersecurity testing. According to sources, a setup error within the “sandbox” testing environment allowed the AI to gain access to the public internet. Meta reportedly conducted this evaluation work alongside an external partner named Irregular. Meta confirmed the story to multiple outlets.
• Nvidia is reportedly considering less high-bandwidth memory for its Rubin Ultra GPU. Sources for The Information said that Nvidia has been testing at least three lower-memory variants of the Rubin Ultra GPU due to high-bandwidth memory (HBM) supply constraints.
• Reuters reported on Wednesday that Point72 Asset Management informed investors that it had been attacked. Hackers also attempted to infiltrate the information systems at other major hedge funds and firms.
• Google's (NASDAQ:GOOGL) stock price dropped on Wednesday on news that Nobel Prize-winning CEO of Google DeepMind, Demis Hassabis, would step down and take the chief scientist role. Chief scientist Jeff Dean and several Google AI colleagues are also leaving to start their own company, which Google will invest in. The primary sources originated as internal company memos sent to staff by Google CEO Sundar Pichai and Demis Hassabis, which were confirmed and reported on simultaneously by major news organizations. The company also disclosed the sale of US$25 billion in investment-grade bonds.

• Texas Governor Greg Abbott said that SpaceX will build a US$17 billion, vertically integrated semiconductor plant in Grimes County, Texas.
• On August 6, the first major lockup tranche of SpaceX stock expired, making about 20 percent of the main 180‑day insider shares eligible for sale, worth roughly US$110 - 120 billion. Trading remained orderly, with no sharp dislocation in the share price.
• Legal AI startup Harvey is reportedly in talks to raise funding at a US$15.5 billion valuation

Earnings

1. SpaceX (NASDAQ:SPXC)

Elon Musk’s SpaceX announced its first earnings since going public, revealing revenue of US$7.8 billion, up 92 percent year-over-year, and a narrowed net loss of US$541 million.

Starlink plus enterprise/government contracts are the main cash drivers, generating roughly US$4.3 billion. Space/launch added just under US$1 billion, while AI brought in about US$2.6 billion, making it the second-largest revenue contributor but still loss-making on an operating basis.

Against that, Q2 capex hit US$18.4 billion, with about US$16 billion funneled into AI data centers and compute infrastructure alone. That capex intensity spooked the market: after a 9.4 percent gain at the close, SpaceX shares fell roughly 8 percent in after-hours trading.

2. Palantir Technologies (NASDAQ:PLTR)

Palantir reported revenue near US$2 billion, up more than 90 percent year-over-year and well ahead of forecasts. Commercial revenue grew around 150 percent and government surged as agencies signed on for its AI platforms, driving adjusted operating margins north of 30 percent and free cash flow margins comfortably above 50 percent. Guidance was raised, sending shares meaningfully higher.

3. Advanced Micro Devices (NASDAQ:AMD)

AMD reported another record quarter, with Q2 revenue around US$11.5 billion, up roughly 50 percent year-over-year. Server CPUs and AI accelerators now contribute well over half of sales and grew triple digits versus last year, pushing gross margins into the mid‑50s and driving high operating income. Against that, AMD is plowing significant R&D and capex back into its AI and server roadmap, so while profitability is robust, the company is choosing to reinvest aggressively, and the stock reaction was choppy as investors weighed huge growth against already-elevated expectations.

4. Shopify (TSX:SHOP,NASDAQ:SHOP)

Shopify delivered Q2 revenue of US$3.6 billion, up roughly one-third year-over-year, and net income of around US$1.5 billion, helped by investment gains. Gross merchandise volume and payments penetration supported strong gross profit and healthy free cash flow margins. On the spend side, operating leverage is improving fast enough that investors rewarded the stock with a sharp post‑earnings move higher.

5. Western Digital (NASDAQ:WDC)

Western Digital revenue came in above US$3 billion, up about a quarter from a year ago, with gross margins in the mid‑40s and robust operating and free cash flow. Stronger pricing and demand in cloud and client storage drove profitability. While the company is still investing in next‑gen flash and HDD technology, the capex load is manageable relative to cash generation, and guidance pointing to continued double‑digit growth has kept sentiment constructive.

6. Sandisk (NASDAQ:SNDK)

SanDisk’s revenue was just under US$9 billion and GAAP net income close to US$7 billion, driven by a mix of volume and pricing across flash products, giving the company unusually strong operating leverage. Management is still spending to secure capacity and technology leadership.

7. SoftBank (TSE:9984,OTCPL:SFBQF)

On Thursday, SoftBank released its fiscal Q1 earnings report, revealing a ¥1.33 trillion (US$8.4 billion) gain on its holding of Intel common stock. The company also revealed that it had borrowed US$10 billion against its stake in OpenAI.

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) finished the week 10.30 percent higher, while the Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) advanced by 11.72 percent.

The VanEck Semiconductor ETF (NASDAQ:SMH) rose by 9.75 percent.

Tech news to watch next week

Next week, tech investors will watch the July CPI and PPI inflation reports to see whether today’s weak jobs data is enough to keep the Fed from raising rates in September; cooler inflation would likely support tech stocks, while a hot reading could revive rate-hike fears.

Investors will also track retail sales, bond yields and earnings from companies including Super Micro Computer (NASDAQ:SMCI), Cisco Systems (NASDAQ:CSCO) and Applied Materials (NASDAQ:AMAT) for signs that AI and semiconductor spending remains strong without the broader economy weakening sharply.