Table of Contents

Market Context
What Happened
Why It Matters
Sector Breakdown
Risks to Watch
What to Watch Next
Final Outlook

Market Context

Canadian growth and technology stocks head into this week facing a genuine test of how much of last week’s AI infrastructure enthusiasm can survive contact with a sharp, geopolitically driven risk-off shock. Monday’s session made clear that the same global sentiment that lifted names like Shopify and Constellation Software on AI-related optimism can just as easily work against them when broader risk appetite deteriorates.

What Happened

U.S. technology and chip stocks led Monday’s declines after President Trump announced the U.S. is reinstating a blockade on Iranian shipping through the Strait of Hormuz, sending oil prices up more than 9% and triggering a broad risk-off move across equities. The Nasdaq Composite fell 1.55% to 25,873.18, notably underperforming the S&P 500’s 0.79% decline and the Dow’s more modest 0.26% drop. Micron Technology fell 4.4% on the day, though the stock remains up an extraordinary 243% for the year so far. SK Hynix, which had surged as much as 13% on its Nasdaq debut the prior week, continued to give back gains as investors booked profits following that rally. Against this backdrop, Taiwan Semiconductor Manufacturing Co. reported June sales up 67.9% year-over-year, with first-half 2026 revenue reaching roughly $75 billion, up 35.6% from the same period last year, offering a notable counterpoint suggesting underlying AI chip demand remains robust even amid Monday’s sentiment-driven selloff.

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Why It Matters

Monday’s selloff looks more like a risk-off reaction than a fundamental reassessment of AI demand. TSMC’s strong June sales figures, released the same day chip stocks broadly declined, suggest the pullback is being driven more by macro uncertainty and profit-taking after a strong run than by any deterioration in actual AI infrastructure spending.

Canadian growth names remain closely tethered to this global sentiment swing. Shopify and Constellation Software, both of which rallied on spillover enthusiasm from the SK Hynix listing the prior week, are likely to see continued sympathy pressure from Monday’s chip stock declines, even though neither company’s own fundamentals changed over the weekend.

Sector Breakdown

Within Canadian technology, Shopify and Constellation Software remain the names most directly exposed to swings in global AI and semiconductor sentiment, given how closely their recent trading has tracked broader chip-sector moves rather than company-specific news. More speculative growth names, such as Xanadu Quantum Technologies in photonic quantum computing, tend to see even larger moves during risk-off periods, since their valuations depend more heavily on distant future outcomes that become harder to underwrite when broader market uncertainty rises. AI infrastructure investment itself, including Meta’s recently announced Alberta data centre, continues to represent a structural theme that TSMC’s strong sales figures help support, even as near-term trading remains volatile.

Risks to Watch

The most immediate risk is that this week’s combination of an oil shock, rising bond yields, and a dense economic calendar extends the pressure on growth stock valuations, given their particular sensitivity to interest rate expectations. Rising Fed rate hike odds, now at 41.2% for this month’s meeting and 76% for September according to CME FedWatch pricing, pose a direct headwind for growth names broadly, since higher rates increase the discount applied to future earnings. A weaker-than-expected close to bank earnings season, which begins today, could add to broader market uncertainty in ways that spill over into technology sentiment as well.

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What to Watch Next

Investors should watch today’s CPI report and Fed Chair Warsh’s testimony closely, given their direct relevance to rate expectations and growth stock valuations. Continued trading in Micron, SK Hynix, and other chip names will offer a read on whether Monday’s selloff extends or stabilizes. TSMC’s full second-quarter earnings release later this week could provide further clarity on whether the underlying AI demand picture remains as strong as Monday’s June sales figures suggested.

Final Outlook

Monday’s chip stock selloff appears more closely tied to a broad, geopolitically driven risk-off shock than to any change in the underlying AI infrastructure growth story, a distinction reinforced by TSMC’s strong same-day sales report. Canadian growth names remain exposed to this global sentiment swing regardless of their own fundamentals, making near-term volatility likely.