U.S. stocks face pressure as chip weakness and IPO funding concerns weigh on sentiment

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Dan Blystone

5 hours ago

U.S. stocks face pressure as chip weakness and IPO funding concerns weigh on sentiment — Stocks pressured by tech, IPOs

Wall Street is set for a weaker start on Thursday as semiconductor shares retreat and investors assess growing demands for capital across the artificial intelligence sector. Market attention is also turning to Middle East tensions and a pipeline of large listings that could pull money from existing equities.

Highlights

Broadcom drops 15% after its AI-driven outlook disappoints, dragging the S&P 500 toward its first weekly decline in 10 weeks.
CrowdStrike and Five Below both fall nearly 10% despite strong earnings, as investors increasingly punish results that fail to exceed heightened expectations.
Alphabet plans to sell $85 billion of stock for AI expansion, raising concerns investors may rotate out of big tech holdings to fund a heavy upcoming IPO pipeline including Anthropic and SpaceX.

Chip stocks and fundraising risks shape Thursday trading

As reported by CNBC, the S&P 500 is heading for a lower open, with Broadcom leading losses after its outlook increase failed to satisfy elevated expectations on Wall Street. The stock is down 15% in morning trading, while the broader index is on track for its first weekly decline in 10 weeks.

Broadcom's restrained tone on AI demand is at the center of the selloff, even as some brokerages including Oppenheimer and JPMorgan raise their price targets. UBS moves the other way, cutting its target, reflecting a split view on whether the company's guidance adequately captures expected AI momentum.

CrowdStrike also comes under pressure despite what is described as a strong beat-and-raise quarter. Its full-year forecast for net new annual recurring revenue growth rises to 27.7%, up 5.2 percentage points from prior guidance, but the stock still falls nearly 10% as investors continue to react harshly even to strong results.

IPO pipeline and credit-sensitive sectors add market strain

Investors are also watching a heavy funding calendar tied to AI and technology. Anthropic says it intends to go public, while SpaceX is set to debut next week and OpenAI still needs to file paperwork, adding to concerns that investors may need to sell existing holdings to fund new offerings.

Alphabet is described as planning to sell $85 billion of stock to support its AI expansion, and there is speculation that Microsoft and Amazon could face similar pressure if debt financing remains costly. Nvidia is seen as a likely source of funds for institutions looking to free up capital, especially after its shares fail to hold gains following Computex.

Outside technology, bank shares remain weak, with Wells Fargo singled out as losing momentum, while credit-sensitive names such as Capital One and Home Depot are viewed cautiously. In the IPO market, Quantinuum begins trading on Thursday after pricing above range at $60 a share, raising nearly $1.7 billion and securing a valuation above $14 billion, while retailer Five Below falls 9% despite beating earnings expectations and raising full-year profit guidance.

Our earlier coverage of Broadcom’s post-earnings sell-off explained how the chipmaker came under heavy pressure after a quarterly revenue miss and AI guidance that reiterated long-term targets rather than raising them. We noted that the reaction underscored how elevated expectations around AI-driven semiconductor growth are leaving little room for anything short of “perfect” results, especially amid intensifying competition from rivals such as Nvidia and Marvell.

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