US stock index futures were firmer across the board this morning, bouncing back after yesterday’s weakness. On Wednesday, the tech sector, and chip stocks in particular, fell sharply, taking the wider market down with them. The NASDAQ and Dow dropped 2.0% and 1.9%, respectively.
Source: TN Trader
Meanwhile, Oracle released a strong set of quarterly results after the close, along with some upbeat forward guidance. But the stock dropped 11% after the company announced plans to raise $40 billion in equity and debt for its AI buildout. It subsequently rallied but was still down 6% at the time of writing. But it was Super Micro Computer which had a real shocker.
SMC plunged 28% after it announced that it was also raising cash ($7 billion) to pay for hardware related to AI orders. The news came as chip stocks were already on the back foot, which helps explain the large drop. Yet these money-raising operations follow hot on the heels of last week’s announcement from Alphabet that it was raising $80 billion through equity sales to fund its AI infrastructure programme.
Investors are wondering which corporation will be next to take advantage of the tech rally since the end of March to unload stock. This has helped to sour sentiment towards AI-related corporations.
Meanwhile, investors are preparing for the largest IPO in market history when SpaceX debuts on the NASDAQ tomorrow. The offering is expected to raise around $75 billion and value the company at $1.8 trillion. There’s certainly a whiff of Elon-mania around the launch, and the size and structure of the deal have captured investor attention.
It seems likely that this month’s sell-off across semiconductor stocks could be the result of investors raising funds to buy stock in SpaceX. The IPO could prove to be a test of broader investor sentiment.
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