European technology stocks opened the week with no clear direction as a recent selloff in artificial-intelligence-linked shares continued to weigh on investor sentiment, compounded by a resurgence of Middle East hostilities between Israel and Iran.

Dutch semiconductor-equipment maker ASML Holding fell 1%, while smaller rival ASM International dropped 2.2%. BE Semiconductor Industries, another Dutch supplier of assembly equipment, declined 1.6%. In contrast, German chip maker Infineon Technologies gained 1.3%, and STMicroelectronics rose 1%, according to market data reported by Dow Jones Newswires.

The mixed performance followed sharp declines in global tech stocks late last week after concerns that massive capital spending on AI infrastructure may not produce expected returns triggered a selloff. That selloff was particularly acute in U.S. markets, where the Nasdaq composite tumbled 4.2% on Friday as strong jobs data stoked fears of higher-for-longer interest rates.

Charu Chanana, chief investment strategist at Saxo Markets, said the current tech selloff could represent a healthy reset within an ongoing bull market. Saxo does not see a combination of recession stress, disorderly bond yields and a broad earnings collapse — classic ingredients of a deeper bear market, she said. However, “the next leg higher will need more than keynote excitement,” Chanana said, referring to announcements made by Nvidia at the annual Computex event. “Markets need proof that AI demand is broadening beyond the chip industry and customers are willing to pay, and margins can survive the huge investment cycle.”

Orange defends SFR deal

In France, Orange CEO Christel Heydemann addressed the planned acquisition of most of Altice’s SFR business, a deal valued at 20.35 billion euros and involving Bouygues Telecom, Orange and Free-iliad Group. She said the parties will focus investments on resilience, cybersecurity and artificial intelligence, and that the transaction is “absolutely not based on any form of market repair or price increase.” Unlike Vodafone’s merger with Three in the U.K., Orange does not anticipate offering massive incremental network-investment commitments as behavioral remedies to appease regulators, she said. Orange shares rose 1.9%, while Bouygues shares fell 0.8%.

Tencent debt issuance

Tencent announced plans to offer notes to professional investors under its $30 billion global medium-term note program. The company currently has $17.51 billion in outstanding notes under the program. Moody’s Ratings assigned an A1 rating to the proposed U.S. dollar and yuan medium-term notes. Analyst Ying Wang said the issuance will “reinforce Tencent’s already strong liquidity position, enhance its financial flexibility, and support its continuous growth in revenue and future investment needs in new technologies.” Moody’s cited Tencent’s leading position in the videogame industry and its Weixin and WeChat ecosystem.

Advantest and the AI testing market

Fears that Advantest’s growth is peaking after a sharp margin expansion last quarter appear overstated, said Morningstar analyst Kazunori Ito. The company lost its exclusive position in testing Nvidia’s chips after Teradyne entered the market in 2026, but Ito said the move to a dual-source arrangement likely reflects Nvidia’s anticipation of significant test opportunities from upcoming platforms. Advantest’s system-on-chip tester holds over 60% market share, giving it a durable economic moat that competitors would find difficult to erode, Ito added. Morningstar raised its fair-value estimate for Advantest by 3% to 35,000 yen after lifting its system-on-chip tester revenue estimate by 3%. Advantest shares traded at 25,290 yen, down 5.5%.

UMS Integration expands in Vietnam

Singapore-based precision-engineering company UMS Integration is acquiring three Vietnamese semiconductor-related businesses, a move that DBS Group Research analyst Lee Keng Ling said should diversify its production bases and complement its core precision machinery and semiconductor-equipment business. Vietnam is also a potentially lower-cost manufacturing location compared with Singapore and Malaysia, which could improve UMS’s cost competitiveness and margins, Lee said. DBS maintained its buy rating and a target price of 3.17 Singapore dollars. UMS shares traded at S$2.46, down 2.8%.

Malaysia tech outlook

Analysts at Hong Leong IB, Toh Woo Kim and Sam Jun Kit, said Malaysia’s technology sector could remain on a positive trajectory in the second half of the year, although volatility might increase as investors shift focus to earnings delivery from valuation gains. The sector is moving into an earnings-upgrade cycle that has yet to be fully reflected in consensus forecasts, they said. Sustained AI infrastructure spending by U.S. hyperscalers and continued fundraising across the broader AI ecosystem provide a supportive global backdrop, they added. However, any resurgence in U.S. inflation or a more hawkish Federal Reserve could weigh on risk appetite and technology valuations. Hong Leong maintained an overweight rating on Malaysian tech, naming Itmax System, UWC, Frontken and Unisem (M) as top picks.