Market snapshot: tech stocks move in different directions
Amid great expectations for many in the technology sector, not all stocks are moving in the same direction. ii's head of markets rounds up the action.
7th July 2026 08:27
by Richard Hunter from interactive investor
US markets bounced back after a long weekend, led by a broad rise across the technology sector, although there were some ominous signs from Asia around the rising weight of expectation which AI stocks are now attracting.
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In South Korea overnight, the Kospi index shed 8% despite the rebound on Wall Street. Of particular note was Samsung Electronics, whose shares fell by more than 8% even after reporting a 19-fold increase in operating income to $58.7 billion (£43.9 billion) in the latest quarter. The wider issue is whether this is a new chapter for investor reaction, related not to any weakness in demand or immediate profitability, but rather whether the level of earnings can be maintained in order to repay the trillions of dollars which have been funnelled into AI investment by the hyper scalers.
The Samsung share price weakness could also in part be the result of investors locking in some profits after a run which has seen the stock rise by 129% in the year so far.
A further test of investor mettle is also on the cards as another Kospi constituent SK Hynix aims to raise $28 billion in a share issue which would see the stock join the Nasdaq. It would be one of the largest ever share offerings in the US, although some way behind the $75 billion which SpaceX raised last month.
SK Hynix shares have gained 228% in the year to date despite some relatively sharp declines over the last few weeks, and this offering is the latest acid test. Ahead of the offering, and as a read across from the Samsung reaction, the shares suffered a near 9% decline. The combined news has also led to both S&P500 and Nasdaq futures pointing lower ahead of opening trades later today.
Prior to developments in Asia, the main US indices all posted gains which included a new record closing high for the Dow Jones. Big tech was a main driver, with Broadcom Inc (NASDAQ:AVGO) rising almost 4% after announcing a long-term agreement to provide silicon products to Apple Inc (NASDAQ:AAPL). Dell Technologies Inc Ordinary Shares - Class C (NYSE:DELL) rose by more than 4% after the President promoted the company by ringing the opening bell from the White House. Microsoft Corp (NASDAQ:MSFT) shares drifted after reporting that it would be cutting 4,800 jobs, or 2% of its workforce, continuing a more recent struggle which has seen its shares fall by some 18% this year.
Thus, the second half of this year is setting up to be one which could define the AI trade in questioning whether the rate of return on investment is at the level which some stellar share price increases have been suggesting. If the room for upside surprises is limited, then fundamentals could make a return, which could provide some strong support – the last quarterly earnings season blew past expectations, general economic growth is healthy and the return of the oil price to pre-Iran war levels will ease some of the inflationary pressure which has been building, lessening the likelihood of an interest rate hike.
In the meantime, the scene is set fair after a testing six months for the market. In the year to date, the Dow Jones has added 10.4%, the S&P500 10.1% and the Nasdaq 12.4%, each having tested new record highs over recent months.
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The UK market is largely exempt from the tribulations of the AI trade outlook, and the FTSE100 has tended to be the source of some support during times of higher volatility in that space this year. By the same token, the premier index has struggled to find a new positive catalyst to help recapture its record high in February, when its selection of strong, stable and developed companies attracted global inflows. Nonetheless, the index has added 7.4% so far this year which, coupled with an average dividend yield of 3%, gives an aura of reliability as opposed to runaway optimism.
In early trade, there was some weakness among mining stocks as well as the likes of Polar Capital Holdings (LSE:POLR), reflecting a more risk-off approach and a reaction to tech weakness. In contrast, there was sufficient buying strength among defensives such as RELX (LSE:REL), Reckitt Benckiser Group (LSE:RKT) and Unilever (LSE:ULVR), where for the latter the stock was boosted by two broker upgrades, to lift the index to a positive open.
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