Investors rushed back into technology stocks today, snapping up beaten-down names after months of heavy selling, as bargain hunters looked to capitalise on deeply discounted prices. Leading the charge were major data-centre developers such as Goodman, NextDC, and Infratil, alongside high-growth technology names including Weebit Nano, Appen, and Bravura Solutions.
The rally marked a sharp turnaround for a sector that has been under intense pressure. Just last Friday, the technology index had fallen 35% over four months, reaching its lowest level in two years. The sell-off reflected growing fears that artificial intelligence could disrupt traditional business models faster than many companies can adapt. Today’s gains, however, suggest that investors believe much of that risk may already be priced in.
Bargain Hunting Drives the Rally
Market participants were clearly attracted by what many described as “bargain basement” valuations. Data-centre operators were among the strongest performers, buoyed by expectations that demand for digital infrastructure will continue to rise as cloud computing, AI workloads, and data storage requirements expand.
Companies like NextDC and Goodman are seen as long-term beneficiaries of the AI revolution, even if short-term earnings remain under pressure due to heavy capital spending. Investors appeared willing to look past near-term uncertainty in favour of structural growth trends.
Smaller technology stocks also joined the rebound. Weebit Nano, an Israeli company developing next-generation computer memory technology, attracted renewed interest from investors searching for exposure to innovation beyond traditional software firms. Meanwhile, Appen and Bravura Solutions gained after Bravura upgraded its profit guidance, providing a rare piece of positive earnings news in a sector that has faced repeated downgrades.
AI Anxiety Still Lingers
Despite today’s rally, fundamental concerns around artificial intelligence remain unresolved. Many technology companies have been hammered in recent months amid fears that AI systems could replace large parts of their core businesses.
Those worries were reinforced overnight when Anthropic confirmed that 100% of its software code is now written by its own AI system, Claude. The announcement sent shockwaves through parts of the tech industry, raising serious questions about the future demand for human-written software, outsourced coding, and data-labelling services.
While investors shrugged off that news today, it highlights the ongoing structural risks facing certain segments of the technology sector. The rebound may therefore reflect tactical buying rather than a decisive shift in long-term sentiment.
Broader Market Strength Supports Gains
The technology rally was supported by broader market strength. The All Ordinaries Index finished significantly higher, helped by solid gains in miners and banks alongside the tech sector’s recovery.
Global markets also provided a supportive backdrop. Wall Street rose 2% on Friday, while markets in Japan and South Korea surged more than 4% today. Those gains helped restore confidence after weeks of volatility driven by concerns over interest rates, global growth, and geopolitical risks.
Commodities and Currency Update
Commodity markets were mixed. Gold and silver both rose, benefiting from renewed investor interest in safe-haven assets. Base metals also moved higher, although gains were more modest. In contrast, iron ore and oil prices fell, reflecting ongoing uncertainty about global demand.
The Australian dollar remained steady, trading just above 70 US cents and just below 60 euro cents. Currency stability provided additional reassurance for investors, particularly those with international exposure.
Household Spending Data Offers Mixed Signals
The key economic data point of the day came from the Australian Bureau of Statistics (ABS), which reported that household spending rose 2.4% over the year to December. However, the monthly figures painted a more complex picture.
Spending fell 4% in December, following a 1% rise in November. Some analysts believe seasonal adjustments may still be struggling to account for the growing impact of Black Friday sales, which increasingly shift consumer spending away from the traditional Christmas period.
While the annual growth figure is encouraging, it remains heavily influenced by population growth. For much of the past 18 months, overall spending growth was driven entirely by population increases, with per-capita spending actually declining.
The latest data shows some improvement, as per-capita spending has finally turned positive. However, population growth still accounts for around 80% of private demand growth, highlighting ongoing pressure on household budgets amid high living costs and interest rates.
Is This the Start of a Tech Recovery?
Whether today’s rally marks the beginning of a sustained recovery or simply a temporary bounce remains an open question. The sharp rebound suggests that investor sentiment had become extremely pessimistic, creating the conditions for a powerful relief rally.
However, many of the underlying challenges facing the technology sector remain firmly in place. AI disruption, high capital expenditure requirements, uncertain earnings visibility, and global economic risks continue to weigh on valuations.
For now, investors appear willing to selectively re-enter the market, focusing on companies with strong balance sheets, clear growth strategies, and exposure to long-term digital infrastructure trends.
As always, volatility is likely to remain elevated. But after months of relentless selling, today’s session offered a reminder that even the most battered sectors can stage impressive comebacks when expectations fall too far.
And that’s finance.