AI stocks face first major liquidity test

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AI stocks face first major liquidity test

Liquidity begins to leave the AI stocks

An increasing number of signals suggest that the market may be facing a liquidity problem following the multi-month rally in AI stocks.

Over recent quarters, a significant share of investment capital has become concentrated in a relatively small group of AI-related companies. The technology sector attracted the bulk of capital inflows, while many other segments of the market lagged behind.

Another factor potentially contributing to the sell-off is preparation for some of the largest IPOs in recent years. The SpaceX order book has already closed, allocation is taking place today, and the company's Nasdaq listing is expected on June 12.

Against the backdrop of the SpaceX IPO, as well as the potential future listings of OpenAI and Anthropic, some investors may be taking profits in highly liquid technology stocks to free up capital for new opportunities.

Magnificent Seven stocks came under pressure at the start of the new trading week.

Alphabet: -3.4%

Apple: -5.1%

Microsoft: -4.5%

Amazon: -3.2%

Meta Platforms: -3.7%

Nvidia: -2.3%

Tesla: -2.4%

It is particularly noteworthy that some of the biggest underperformers this week have been companies widely regarded as major beneficiaries of the AI boom.

Super Micro Computer: -38.27%

Ciena: -29.94%

Qualcomm: -23.52%

Broadcom: -22.35%

Micron: -17.39%

AMD: -16.61%

Investor psychology becomes the market's biggest risk

It is important to remember that when capital becomes heavily concentrated in a single sector, market participants often react aggressively to even minor negative developments.

Under such conditions, relatively small capital outflows can trigger disproportionately large corrections.

Fear remains one of the most powerful forces in financial markets. It can turn even the most disciplined investors and traders into panic sellers.

Periods of irrational optimism are often followed by growing concerns about preserving capital and protecting profits.

The next test for AI stocks is earnings

If pressure on the technology sector persists after the SpaceX IPO, the market could face its first major capital rotation within the AI sector since the current growth cycle began.

The key question is no longer inflation or geopolitics.

Instead, investors are trying to determine whether future financial results can justify the valuations that emerged after one of the strongest rallies in the history of the technology sector.

The upcoming earnings season could ultimately determine whether the AI boom resumes its upward trajectory or enters a period of deeper correction.

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