ASX Tech July Winners: Technology still top despite volatile July ...

5 Aug 2024

Stockhead

ASX tech rose only slightly by 0.22% in July but remains top sector performer YTD Investor enthusiasm in AI stumbled with Nasdaq Composite Index dipping 0.7% in July FBR up 100% in July after its first next-generation Hadrian X construction robot arrives in US

The S&P/ASX 200 Information Technology sector rose just 0.22% in July, but has risen 28.19% to remain the top performing sector of 2024.

The US Nasdaq Composite index – the bellwether for the global tech sector – which rallied by more than 44% in 2023, fell 0.7% in July but remains up 17.7% YTD.

Global X investment strategist Billy Leung told Stockhead the tech sector has faced a challenging period recently, largely due to several key factors.

Among these has been recent earnings results of the so-called Magnificent 7 Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.

“One significant influence has been Google’s Q2 results, which showed a slowdown in capital expenditures, particularly in investments into AI infrastructure and innovation,” he said.

“This raised concerns among investors about the current state and future potential of the AI and innovation trade, leading to increased scrutiny of tech earnings.

Leung noted that with Google’s results being mostly in line with expectations (with only YouTube missing), and Microsoft’s solid earnings (with a slight miss in Azure), both companies experienced a modest sell-off.

“The reaction suggests that the market is currently very sensitive to any signs of slowdown in growth areas like AI and cloud services,” he explained.

“It’s important to note that we don’t believe there is a structural change in the AI theme with still significant advancements in chip technology, ongoing development in cloud infrastructure, and a rising adoption of AI use cases.

“The concerns triggered by Google’s capex guidance appear to be more of a reassessment rather than a write-off of the AI trade.”

This perspective is supported by the fact that both Microsoft and Meta have increased their capex, said Leung, which indicates that Google’s softer guidance might be an outlier.

Post July end the Amazon earnings report was released – crucial to market sentiment.

Leung said the market was looking for a strong performance and clear guidance from Amazon to help “repair” recent damage to tech sentiment and reinforce confidence in the sector’s long-term growth prospects.

However, it wasn’t to be with the Amazon result disappointing the market. The company’s share price slid as much as 6% on Thursday after reporting weaker-than-expected advertising revenue for Q2 CY24 and issuing a disappointing forecast for the current quarter.

Chart via S&P The top ASX tech winners in July 2024

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Code Name Price % Change Market Cap LVH Livehire Limited 0.026 136% $12,196,731 QHL Quickstep Holdings 0.375 134% $28,690,486 FBR FBR Ltd 0.048 100% $227,559,449 3DP Pointerra Limited 0.074 80% $53,135,069 SMN Structural Monitor 0.66 65% $86,536,203 IXU Ixup Limited 0.023 64% $29,407,299 FCT Firstwave Cloud Tech 0.019 58% $30,780,349 AI1 Adisyn Ltd 0.033 57% $7,220,148 ZMM Zimi Ltd 0.017 55% $1,899,971 ICE Icetana Limited 0.027 50% $7,144,968 NVU Nanoveu Limited 0.027 50% $13,632,913 ATV Active Port Group 0.069 44% $21,937,965 BEO Beonic Ltd 0.03 43% $15,623,128 IKE Ikegps Group Ltd 0.64 42% $109,858,685 SNS Sensen Networks Ltd 0.031 41% $24,115,171 DXN DXN Limited 0.086 34% $16,446,263 LNU Linius Tech Limited 0.002 33% $11,093,481 SIS Simble Solutions 0.004 33% $3,013,803 IRE IRESS Limited 10.63 32% $1,940,742,635 DCC Digitalx Limited 0.054 32% $45,919,414 ERD Eroad Limited 1.21 29% $226,329,965 SPA Spacetalk Ltd 0.022 29% $8,007,364 PHX Pharmx Technologies 0.049 29% $30,523,846

Quickstep Holdings (ASX:QHL) was up 134% in July and was issued with a please explain speeding ticket by the ASX on July 9. Later in the month QHL issued a trading update including that its restructuring activity, announced to the market in June 2024, has been successfully completed, and several key business strands, including work on the C-130 and F35 aircraft, have been planned out.

QHL also highlighted record drone production output in Q4 FY24 from the company’s Geelong facility.

Robotic technology company FBR (ASX:FBR) rose 100% in July after announcing its first next-generation Hadrian X construction robot has arrived in the US.

The company says the Hadrian X was being transported to a facility in Fort Myers, Florida to undertake site acceptance testing.

Structural Monitoring Systems (ASX:SMN) was up 65% in July after announcing its maiden quarterly profit before tax of $510k for the quarter ended June 30, which it says was aided by the launch of its new MTP136D forest service radio product.

SMN recorded EBITDA of $1.21m for the June quarter, an increase of 123% on pcp, attributed to the continued strong performance of its AEM Avionics and contract manufacturing businesses.

The company recorded gross revenue for the quarter of $7.97m up 34% on the prior year. SMN recorded a positive cashflow from operating activities of $1.01m for the year.

ASX tech laggards in July, 2024

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Code Name Price % Change Market Cap 1TT Thrive Tribe Tech 0.002 -50% $941,243 FL1 First Lithium Ltd 0.115 -34% $9,956,701 ESK Etherstack PLC 0.155 -26% $20,438,127 XPN Xpon Technologies 0.012 -25% $4,349,298 ROC Rocketboots 0.086 -22% $8,616,641 EVS Envirosuite Ltd 0.046 -19% $53,267,433 DRO Droneshield Limited 1.39 -19% $1,059,945,042 NVQ Noviqtech Limited 0.031 -18% $4,690,562 ADA Adacel Technologies 0.475 -17% $36,587,995 AJX Alexium International Group 0.01 -17% $16,401,614 QOR Qoria Limited 0.36 -16% $424,424,892 BRN Brainchip Ltd 0.185 -16% $352,630,123 PIL Peppermint Inv Ltd 0.0085 -15% $19,092,225 COS Cosol Limited 1.07 -15% $189,879,801 ODA Orcoda Limited 0.15 -14% $25,373,560 FGL Frugl Group Limited 0.043 -14% $4,511,071 EIQ Echoiq Ltd 0.155 -14% $86,024,700 AXE Archer Materials 0.29 -13% $79,002,574 FND Findi Limited 4.08 -13% $183,004,579 FND Findi Limited 4.08 -13% $183,004,579 XRG Xreality Group Ltd 0.048 -13% $26,550,688 RKT Rocketdna Ltd. 0.007 -13% $4,592,804 GTI Gratifii 0.007 -13% $12,292,334 IS3 I Synergy Group Ltd 0.007 -13% $2,493,524