Semiconductor earnings and Musk trial drive focus on tech sector amid AI spending surge

Technology stocks remain under scrutiny as semiconductor companies prepare to report earnings against a backdrop of an artificial intelligence boom. Advanced Micro Devices, Arm Holdings and Lattice Semiconductor are scheduled to release results over the coming days, with Lattice set to report on Monday, followed by AMD on Tuesday and Arm on Wednesday. These filings are expected to provide critical insight into the supply side of the AI build-out, specifically regarding demand for data centre chips and potential constraints on memory components.

Simultaneously, the legal battle between Elon Musk and Sam Altman at OpenAI proceeds to trial in California. Jury selection is underway with opening arguments expected to begin on Tuesday. Musk alleges that the company misled him regarding its transition from a non-profit to a for-profit entity, a claim OpenAI has rebutted by stating Musk was aware of the shift. The case has drawn significant attention, with major figures including Microsoft CEO Satya Nadella expected to take the stand.

While the semiconductor sector has seen a record surge, with the PHLX Semiconductor Index rising more than 40 per cent in April, analysts warn of potential volatility given the lofty performance. The Magnificent Seven giants, including Apple, Amazon, Google, Meta and Microsoft, continue to navigate massive capital expenditure plans for AI infrastructure. This heavy spending has overshadowed solid results for some firms, contributing to market dynamics where investor appetite is being tested by rising costs and supply challenges.

Apple reported second quarter earnings that beat analyst estimates, with iPhone revenue growing 20 per cent for the second consecutive quarter. However, CEO Tim Cook warned that supply constraints for Macs could take several months to resolve due to high demand from AI developers. Amazon disclosed a cloud backlog of $364 billion in the first quarter, excluding a recently announced deal with Anthropic, indicating surging demand for its services despite heavy AI spending.

Alphabet announced a strategic shift to sell its custom Tensor Processing Units directly to customers for installation in their own data centres, marking a change from its previous strategy of renting capacity. Meta raised its full-year capital expenditure guidance to between $125 billion and $145 billion, citing higher component pricing and data centre costs, a move that contributed to a six per cent drop in its stock price.

Qualcomm shares jumped over 11 per cent on reports that OpenAI is collaborating with the chipmaker and MediaTek to develop smartphone processors for AI integration, with mass production expected in 2028. As these developments unfold, the technology sector remains at the centre of global market attention, balancing the promise of AI innovation with the realities of execution and legal uncertainty.