The latest U.S. non-farm payrolls data for June came in cooler than expected. Following the release, the three major U.S. stock indices opened higher, with the Nasdaq Composite up 0.3% at the open. Technology stocks linked to the primary AI trade mostly rose, with Oracle Corp (NYSE: ORCL) gaining over 2%, Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) up more than 1%, and NVIDIA Corp (NASDAQ: NVDA) rising nearly 1%.

Analysis indicates that after the jobs report, markets scaled back bets on Federal Reserve interest rate hikes. Expectations for a rate hike have now been fully priced in for December, a shift from the prior October forecast.

Previously, concerns about a slowdown in computing power demand resurfaced, affecting global tech stocks, after Meta Platforms Inc (NASDAQ: META) announced plans to lease out its AI compute capacity. Regarding this, CICC Securities suggests that Meta's decision to rent out computing power should not be overly pessimistically interpreted as a sign of compute oversupply or a broad capital expenditure slowdown. The reasoning is fourfold: first, this is not entirely new news, with similar reports emerging in May; second, Meta's position as a hyperscaler is unique, with its consumer-focused business meaning AI monetization relies heavily on advertising, and exploring cloud services could enhance shareholder returns and cash flow; third, Meta still faces a compute shortage, evidenced by recent reports of Google limiting its access and a new agreement with Crusoe; fourth, hardware demand is driven by inference workloads, not training-side inflation.

The core reasons for the recent adjustment in global technology stocks, according to the analysis, remain fragile trading structures, an earnings vacuum period—where there is a lack of high-frequency data to track cloud service providers' capex plans and return on invested capital compared to hardware—and a period of liquidity headwinds exemplified by the jobs report. Short-term volatility is seen as providing another window for strategic positioning, with a focus on maximum drawdowns exceeding 10% and implied volatility above 30% near market bottoms.

Looking ahead, by mid-to-late July, as the U.S. earnings season reconfirms sector strength and inflation data confirms a peak, the technology sector is positioned for a potential new wave of upward momentum.