Large mutual funds and passive index funds are setting aside more cash in preparation for the upcoming IPOs of SpaceX and OpenAI, which could force these funds to sell down existing holdings in other large-cap stocks. According to multiple reports, SpaceX is targeting a valuation of about $1.75 trillion for its listing, while OpenAI could seek a valuation of around $1 trillion.
Key Takeaways
Large funds are preparing for the IPOs of SpaceX and OpenAI by setting aside cash, potentially forcing sales in other large-cap stocks. Meanwhile, Micron Technology briefly reached a $1 trillion market value, joining an exclusive club with Samsung and SK Hynix. The AI-driven rally has significantly boosted chipmakers' valuations.
Meanwhile, Micron Technology briefly topped $1 trillion in market value for the first time on Tuesday, May 26, joining an exclusive club that includes Samsung and SK Hynix. The surge was driven by stronger AI demand and long-term supply deals, with brokerage UBS sharply raising its target price for Micron stock to imply a potential valuation of close to $1.8 trillion in the next twelve months.
SK Hynix also crossed the $1 trillion threshold, with shares up about 250% since the start of the year. The rally was led by Samsung and SK Hynix, which significantly contributed to South Korea’s KOSPI index surging over 3%. Samsung workers are set to receive bonuses of over $400,000 following a landmark deal on worker bonuses.
Analysts note that the potential inclusion of newly public companies like SpaceX and OpenAI could force passive funds to sell down existing holdings in other large-cap stocks. The AI-driven rally has significantly boosted chipmakers' valuations, with Micron's stock more than tripling year-to-date. However, a Reuters analysis shows that investors would have been better off buying an S&P 500 index fund about three-quarters of the time compared to investing in recent high-valued IPOs.
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