Investors who bought at rock-bottom prices during the recent market decline in technology stocks are now reaping the rewards. As stocks rebounded to end the week and were back to near all-time highs, shares of artificial intelligence heavyweights like Nvidia and Microsoft were among the biggest winners. Shares of the chipmaker gained 19% in five days, while Microsoft climbed 3%. Shares of iPhone maker Apple were up 4%. On an aggregate level, the Technology Select Sector SPDR Fund (XLK) gained more than 7%, posting its best week since November 2022. The exchange-traded fund is now less than 7% away from its all-time high. XLK 5D Mountain The Technology Select Sector SPDR Fund (XLK) posted its best week in two years. This week was favorable for investors hoping for a stable economy, and stocks largely erased gains from the early August sell-off. The S&P 500 has gained about 4%. The S&P 500 is now less than 2% from its record high in July. But the rebound in tech stocks should come as no surprise, as the fundamental tailwinds for AI have not changed much in recent months, although some companies have drawn investor ire for increasing capital spending to fund AI projects, according to Gene Munster, managing director of Deepwater Asset Management. “Nothing has changed in the underlying AI trade, (but) I’m surprised people have come back so quickly,” Munster told CNBC on Friday. “Investors needed that mental reset.” The next test for the market to gauge how long the rebound in tech stocks will last is Nvidia’s second-quarter results on Aug. 28, Munster explained. “What we’ve seen in the market over the past week (in) this rally is basically optimism about what Nvidia is going to say. That’s obviously the indicator, and that’s where all the attention is going to be,” he added. Munster also posited that even if Nvidia executives say they expect a lengthy delay to their Blackwell AI chip, that in and of itself is actually a tailwind. “If they say it’s delayed and they still expect a big bump, investors are probably going to be patient and hold on,” Munster said.
