Investopedia Markets News (all except PF)

Intel shares are still up nearly 170% since the start of the year.
Credit: CFOTO / Future Publishing / Getty Images

Key Takeaways

• Intel has pulled back from its record run recently, and traders are pricing in another big move for the chipmaker's stock next week.
• Intel and many other big tech stocks lost ground this week amid some worries they may have climbed too high, too quickly.

Intel's stock took a big hit this week, bringing its record rally grinding to a halt. Could it signal more losses ahead, or leave the stock poised for a rebound?

The shares have fallen about 14% since the week began, making Intel (INTC) one of the biggest decliners in the S&P 500 this week, along with a number of other chip stocks amid some worries they may have climbed too high, too quickly. Even with its recent losses, Intel remains one the top gainers in the index for the year so far, up nearly 170% year-to-date and close to 400% over the last 12 months after a string of high-profile deals and signs of strong AI demand boosted optimism about a turnaround in its business.

Based on current options pricing, traders are now anticipating the stock could swing up to another 9% in either direction by the end of next week. A move of that size from Friday's close around $99 could see the shares rally back above $107, or slip below $91, giving up more of their gains this year.

Why This Matters to Investors

Intel's pullback this week could be taken as a sign that some investors are wary its rapid rise may have left it overvalued.

The recent slide in Intel's stock has dragged it closer to Wall Street's consensus target around $95, per Visible Alpha data. Of the seven analysts with current ratings tracked by Visible Alpha, just three have said they consider the stock a "buy," compared to three neutral, and one sell rating.

Among those who have hesitated to recommend buying the shares, including Deutsche Bank, UBS, and Bank of America, some have voiced concerns that Intel's rapid rise may have pushed its stock ahead of its fundamentals. Jefferies, which has also maintained a "hold" rating on the shares, has also suggested that rivals such as Advanced Micro Devices (AMD) could be stronger choices, anticipating bigger gains from the same AI-related tailwinds.

Still, reports that Intel could be close to securing Apple (AAPL) as a new customer for its foundry business, or win contracts from other companies, could stand to inject fresh enthusiasm into the shares. Such a deal would mark a major milestone in the company's efforts to attract new customers.

This article has been updated since it was first published to reflect more recent prices.

The Cryptocurrency Hit Its Lowest Level Since 2024

The price of bitcoin has plummeted since late 2025.
Credit: Tayfun Coskun / Anadolu via Getty Images)

Key Takeaways

• Bitcoin's price dropped under $60,000 today, marking its lowest price since before the presidential election in 2024.
• The extended run lower has the cryptocurrency trading down more than 30% this year alone and for less than half record highs seen late last year.

The price of bitcoin dropped below $60,000 on Friday, the latest downbeat milestone for the leading cryptocurrency, which just months ago traded at more than twice the price.

Bitcoin was as of this afternoon a bit above that level, but the drop extended a dramatic run lower. Bitcoin as of October was claiming prices at all-time highs above $120,000, but is now at levels last seen in the fall of 2024, before Donald Trump's election to a second presidential term spurred optimism among crypto investors. At current levels, bitcoin is down 30% since the start of 2026, which set it among the S&P 500's worst performers year-to-date if it were a stock.

Bitcoin's drop has also weighed on crypto-linked shares in a year when stocks have broadly risen. Shares of Strategy (MSTR), a major bitcoin holder, have lost more than 20% of their value in 2026, while stock in crypto exchange Coinbase (COIN) has lost about a third of its value.

The S&P 500, meanwhile, is up about 8% in 2026, powered largely by investor enthusiasm for tech shares. Gold, which some bitcoin backers say bitcoin can supplement or even replace as a hedge against various forms of uncertainty, is about flat (as measured by the performance of the SPDR Gold Shares ETF, or GLD). In short, some of the latest pressure on crypto has raised questions about two theses at times used to support bitcoin—that it can be seen as a hedge, or as a risk asset.

In a tactical sense, experts cite a range of issues for bitcoin's latest weakness, which comes as crypto has continued to integrate with mainstream finance. Some suggest that investors, perceiving opportunity in speculative assets and stocks seen as potentially delivering strong and quick returns—among them, perhaps, the IPO of SpaceX, which itself holds bitcoin—are moving money elsewhere.

Others cite Strategy's recent decision to sell bitcoin for the first time in years as a blow to confidence. Data providers observe recent outflows from the spot bitcoin exchange-traded funds the emergence of which likely helped power bitcoin higher in 2025. Those who see bitcoin as a risk asset may be discouraged by signs that the Fed may not cut rates further soon.

And optimism that the passage of the Clarity Act, a bill seen as a possible boon to the crypto sector should it pass, has at times wavered, with some observers wondering if the midterm elections have turned lawmakers' attentions elsewhere and others wondering if pushback on from the banking sector might temper any win the bill could provide.

There are, of course, still bitcoin backers—among them Strategy Chairman Michael Saylor. "Volatility," he wrote this week on X, "creates opportunity."

This article has been updated since it was first published to reflect the close of trading Friday.

Lululemon shares have lost nearly half their value since the start of the year.
Credit: Hector Retamal / AFP / Getty Images

Key Takeaways

• Lululemon shares tumbled Friday after the athleisure apparel maker lowered its full-year outlook.
• The company saw sales weaken toward the end of the first quarter and into the current quarter amid worsening sentiment around its brand.

A weaker outlook has Lululemon’s stock plunging to its lowest level in years.

Shares of Lululemon Athletica (LULU) were down nearly 8% to $115 in recent trading, their lowest price since May of 2018, after the apparel maker lowered its full-year forecast. Lululemon said it now expects $11 billion to $11.15 billion in sales for the year, which would be flat to a 1% decline from last year, down from a previous forecast of $11.35 billion to $11.5 billion. Lululemon's second-quarter outlook of $2.45 billion to $2.48 billion in sales and earnings per share of $1.76 to $1.81 also came in well below what analysts were expecting, per Visible Alpha estimates.

Interim co-CEO Meghan Frank pointed to a drop in sales at the end of the first quarter and start of the second quarter amid "negative commentary in the media and on social channels," and said the company's recent product launches have had mixed performances, per an AlphaSense transcript.

Why This Matters to Investors

Friday's stock slump and sliding sales could complicate Lululemon's turnaround effort in the months ahead of a new CEO taking over.

JPMorgan analysts cut their price target for Lululemon's stock to $149 from $173 following the report, citing the weaker outlook and comments about Lululemon's recent product launches. The company posted earnings per share of $1.69 on $2.5 billion in sales in for the first quarter, roughly in line with analysts' estimates.

Lululemon shares have been pressured for more than a year by sales struggles, a sudden CEO departure, and a proxy battle with founder Chip Wilson that was resolved last month. The athleisure company is looking to turn things around when its new CEO, former Nike (NKE) executive Heidi O’Neill, takes over the top job on Sept. 8.

With Friday's slump, Lululemon shares are down about 45% since the start of the year, and almost 60% in the last 12 months.

May Employment Numbers Blow Past Economists' Expectations

Surging job creation puts the U.S. economy on more-solid footing.
Credit: Alex Wong / Getty Images

Key Takeaways

• U.S. employers added 172,000 jobs in May, far exceeding economists' estimates.
• Job numbers for the previous two months were also revised sharply upward, crushing the case for the Fed cutting its benchmark interest rate to bolster the job market.
• The labor market has now added jobs for three months in a row, the first time that's happened since May 2025.

Forecasters were expecting the job market to extend its recent rebound. Instead, it shot up like a rocket.

U.S. employers added 172,000 jobs in May, while the unemployment rate remained at 4.3%, relatively low by historic standards, the Bureau of Labor Statistics said Friday. The magnitude of job creation was more than double the 80,000 forecasters had anticipated according to a survey of economists by Dow Jones Newswires and the Wall Street Journal.

On top of that, April's job creation figures were increased to 179,000 from the 115,000 previously announced, while for March, the total was revised upward to 214,000 from 185,000. The labor market has now added jobs for three months in a row, the first time that's happened since May 2025.

The solid hiring figures mark a distinct turnaround from last year and early 2026, when the market alternated between gaining and losing jobs each month and was pretty much treading water, as tariff-related uncertainty discouraged employers from expanding and bringing on new staff.

"The hiring recession is over," Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary. "This is encouraging news for job seekers and for the U.S. economy. The labor market has stabilized and is showing early signs of a genuine rebound."

What This Means For The Economy

Surging job creation puts the economy on more-solid footing, while all but eliminating the chances the Federal Reserve will cut interest rates any time in the foreseeable future.

Data Raises Expectations for Interest Rate Hike

The surge of job creation all but extinguished any hopes in financial markets that the Federal Reserve will cut its key interest rate any time soon.

Earlier in the year, Fed officials had been pulled in opposite directions by the two halves of its dual mandate to keep prices stable and employment high as the job market faltered and inflation accelerated. Now that the signs of weakness in the job market have faded, the Fed is free to focus on inflation, exacerbated by the Iran war's boost to fuel prices. Fighting inflation would mean keeping the fed funds rate higher for longer, or, more likely than not, raising it.

Traders are pricing in a two-thirds chance of a rate hike by the end of the year according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

"We've gained more and more confidence in the last prints that the Fed doesn't have to be worried about the labor market," Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management, wrote in a commentary. "Laser focused on inflation and it will all come down to the duration of this War to determine the Fed's next move."

Job Growth Happening in Many Sectors

The job creation in May was widespread across industries, unlike in past months, where hiring was concentrated in education and healthcare.

Leisure and Hospitality led the way with the addition of 70,000 jobs, while Governments added 52,000 jobs, the most since July 2024. Health care and social assistance was in third place, adding 47,000 positions. Even the manufacturing sector added 7,000 jobs and stayed in positive territory for the year after losing jobs every month in 2025.

The job market isn't totally out of the woods, however. Some forecasters saw risks that the Iran war threatens to drag down hiring, just as it pushes up inflation, if the conflict isn't resolved soon.

"The ongoing oil price shock and economic uncertainties of war are weighing and will continue to weigh on the economy," Elizabeth Renter, senior economist at NerdWallet, wrote in a commentary. "We haven't seen the end of that, and there's a chance that the longer it continues, the less vigor employers have for investment and hiring."

UPDATE: This article has been updated after initial publication to include additional details from the monthly employment report, as well as comments from economists.

News of the day for June 5 ,2026

The Dow Jones Industrial Average soared to a record high on Thursday, but a sharp drop in shares of Broadcom and other chipmakers pushed the Nasdaq into negative territory.
Credit: Michael M. Santiago / Getty Images

Stocks are under pressure in premarket trading Friday, putting the S&P 500 in danger of snapping a nine-week winning streak; chip stocks are extending yesterday's losses as the AI trade stumbles after a recent rally; the May jobs report is expected to show that U.S. employers added roles for the third straight month; S&P Global said it is not making changes to its rules for new additions to stock indexes, which would keep SpaceX, Anthropic and OpenAI from being quickly added after their mega-IPOs; and Lululemon shares are tumbling after the apparel maker cut its full-year outlook. Here's what you need to know today.

S&P 500 Winning Streak in Danger as Futures Point Lower

Futures are pointing to a lower open for the S&P 500 and the Nasdaq as tech stocks extend yesterday's declines. The S&P 500 came into Friday's session fractionally higher for the week, after gaining ground in each of the previous nine weeks. In recent trading, futures tied to the benchmark index were down 0.5%, while Nasdaq futures dropped 1.2% and Dow Jones Industrial Average futures added 0.1%. The Dow soared nearly 900 points to a record close on Thursday. Bitcoin remains under pressure, trading at $62,200, near its lowest levels of 2026. Gold futures ticked lower to $4,490 an ounce, while WTI crude oil futures fell slightly to $92.75 per barrel. The yield on the 10-year Treasury note was little-changed at 4.48%.

Chip Stocks Extend Losses as AI Trade Loses Steam

Shares of a number of chipmakers are poised to end the week on a low note, extending a recent slump for the AI trade. Broadcom (AVGO) shares were down 2% in recent premarket trading after sliding 13% yesterday, as investors appeared disappointed that the chipmaker didn't raise its outlook despite reporting better-than-expected quarterly results. Broadcom's slide on Thursday weighed on other chip stocks, many of which continue losing ground this morning. Shares of Intel (INTC), Advanced Micro Devices (AMD), Marvell Technology (MRVL), Micron Technology (MU) and Arm Holdings (ARM) were each down more than 3% recently.

May Jobs Report Due Out This Morning

The jobs report for May is due out this morning, giving investors their latest insight into how the Iran war and the inflation it has caused are affecting the job market. The report, set for release at 8:30 a.m. ET, is expected to show that U.S. employers added about 80,000 jobs in May, down from 115,000 in April. Nonetheless, it would mark the third month in a row that the economy has added jobs, the first time that has happened since early last year. The unemployment rate is expected to hold steady at 4.3%, as the "low hiring, low firing" job market persists.

S&P Global Says No Changes Coming to Index Rules to Allow Big IPOs to Join Early

The AI stocks that will start trading after massive IPOs in coming months will have to wait just as long as other companies to join at least one major index. S&P Global said Thursday that it will not be making any alterations to the requirements for a new stock to join the S&P 500 or its other indexes. To join the benchmark index, companies will still have to trade publicly for a year following an IPO, turn a consistent profit, and have an investable weight factor— the ratio of its public share float to its total outstanding shares—of at least 0.1%. That decision would keep SpaceX, OpenAI and Anthropic from being quickly included in the benchmark indexes after their highly anticipated public trading debuts.

Lululemon Stock Sinks as Apparel Maker Cuts Outlook

Shares of Lululemon Athletica (LULU) are tumbling Friday after the apparel maker lowered its full-year forecasts, offsetting quarterly results that met estimates. For the full year, Lululemon now forecasts $11 billion to $11.15 billion in sales, down from a previous range of $11.35 billion to $11.5 billion, while EPS is now projected at $10.95 to $11.15, down from $12.10 to $12.30 previously. Lululemon shares have been under pressure recently owing to weak sales, a CEO departure and a proxy battle with founder Chip Wilson that was resolved last month. Former Nike (NKE) executive Heidi O’Neill is set to take over as CEO on Sept. 8. Lululemon shares, which through yesterday's close had lost 40% since the beginning of the year, were down more than 10% in premarket trading.

Some prediction market bettors see SpaceX's market cap at $4 trillion-plus at the close of IPO day.
Credit: Photo by Michael Yanow / NurPhoto via Getty Images

Key Takeaways

• Some prediction market bettors think SpaceX's closing capitalization could exceed $4 trillion at the end of its first trading day.
• That would suggest that the stock could more than double from its expected IPO price of $135.

Could Elon Musk's rocket company rank among the Magnificent 7 on its debut day? Some traders are betting on it.

On prediction markets, some bettors figure that SpaceX's market capitalization will exceed $4 trillion by the end of its first day of trading, valuing the company more richly than Microsoft (MSFT) and possibly putting it in the neighborhood of Alphabet (GOOGL).

Clearly, there's euphoric sentiment around what is slated to be the largest IPO in history, seen landing next week: With SpaceX expected to have about 13 billion shares outstanding, not counting underwriters' options to purchase extra shares, a value of $4 trillion-plus would mean that shares would close above $300 apiece. That implies a first-day jump of 125%-plus from its expected IPO price of $135.

WHY THIS MATTERS TO YOU

If investors bid up SpaceX's stock to the highest point prediction market bettors think it could reach, the yet-to-be profitable company would rank among the most valuable firms in the world.

To be sure, the $4 trillion bet—which would put SpaceX somewhere in the top 5 of U.S. companies—is an outlier: The Polymarket event contract for it was recently priced at less than 2 cents, meaning the perceived odds of that happening, per bettors, are just 1%, down from 4% a couple of weeks ago.

Polymarket bettors place a 38% probability that SpaceX's closing market valuation will exceed $2.4 trillion. That bet implies the stock will end the day at roughly $185 apiece, a 35% premium to the expected IPO price.

At the other end of the range of bets, per Polymarket: There are low odds, of about 1%, that SpaceX's closing valuation won't exceed $1 trillion. That would suggest the stock would close at around $76, some 40% below its IPO price.

To be sure, some market watchers think something along those lines is possible, with an analyst earlier this month valuing the company at $780 billion.

Technology was one of the few sectors in the red Thursday, while broader markets gained.
Credit: Michael M. Santiago / Getty Images

Key Takeaways

• Broadcom led tech stocks lower Thursday, despite solid quarterly results.
• The pullback comes after a big run-up in the stocks to record highs in recent weeks.

Could the AI trade be starting to lose its edge—or is it just primed for a break?

Shares of custom chipmaker Broadcom (AVGO) tumbled more than 12%, leading other stocks in the industry lower Thursday, despite earnings that topped analysts' projections. Micron Technology (MU) and Advanced Micro Devices (AMD) were also among the biggest decliners in the S&P 500, at a time when the broader index gained. Technology was the worst-performing sector in the S&P 500.

The lack of participation from some of the biggest AI names could reflect some concerns about whether a record-setting rally in recent weeks left the stocks due for a pullback, some Wall Street analysts said. Many of Thursday's laggards, including Broadcom, Micron, Arm (ARM), and AMD, reached fresh highs earlier in the week.

Why This Matters to Investors

Thursday's pullback could point to worries about the sustainability of gains in the AI sector and whether some stocks may have climbed too high, too fast, after a recent run-up.

"Any near-term volatility should not come as a surprise after the recent strong rally," analysts at UBS wrote in a blog post Thursday. The analysts said they still expect "solid AI fundamentals" to drive future gains and advised investors to "stay positioned for the long-term growth of AI."

Investors upped their scrutiny of the AI buildout this week after Google-parent Alphabet (GOOG) announced plans to issue $80 billion of stock to fund its data center expansion, underscoring the immense costs of the AI buildout fueling Broadcom's growth. Some experts say the stock sale could mark the beginning of a new phase of "more rational spending."

Cybersecurity provider CrowdStrike (CRWD), which like Broadcom saw its stock hit new highs ahead of better-than-expected results after the bell yesterday, also ranked among the biggest decliners in the S&P 500 Thursday. "Even Lebron needs a breather," analysts at Jefferies, who maintain a "buy" rating on Crowdstrike shares, told clients on Thursday.

Gerber Kawasaki Wealth & Investment Management CEO Ross Gerber, who called both companies "excellent" choices with "outstanding performance," told investor in a social media post Thursday to "take advantage of post earnings sell offs."

Job seekers are hoping companies can break out of the low-hire, low-fire rut.
Credit: Joe Raedle /Getty Images

Key Takeaways

• Forecasters expect the U.S. economy added fewer jobs in May than in April.
• Despite the deceleration, the third month in a row of job gains would be a sign the job market is stabilizing after a very shaky start.
• Because of the crackdown on immigration and the aging workforce, it will take fewer job creations than in the past to keep unemployment from rising.

The job market may be stabilizing after a shaky start to the year.

A report Friday from the Bureau of Labor Statistics is expected to show U.S. employers added 80,000 jobs in May, down from a gain of 115,000 in April, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The unemployment rate is expected to remain steady at 4.3%, a relatively low level by historical standards.

Should the report match expectations, it would mark the third month in a row the economy has added jobs, the first such stretch since early 2025. The stabilizing trend would be a turnaround after late 2025 and the outset of the year, when the economy lost jobs in multiple months as economic uncertainty discouraged hiring.

What This Means For The Economy

Stable job growth is a good sign for the health of the overall economy, and takes pressure off of the Federal Reserve to lower interest rates to prevent a surge of unemployment.

Forecasters expect most of the job gains to be in education and healthcare, continuing the trend from recent reports. Some economists said they expect job growth to continue as the year goes on.

Another wrinkle is that because of reduced immigration and the aging workforce, it will take fewer jobs added to the economy each month than in the past to keep the unemployment rate from rising. Economists at Deutsche Bank, for instance, put the "break-even" rate at 20,000 jobs.

Although the economy struggled to meet that benchmark late last year, there are signs things have turned around, economists at the bank led by Chief Economist Matthew Luzzetti, wrote in a commentary.

"Downside risks are still present from the continuation of the fragile low-hiring, low-firing equilibrium," they wrote. "But upside risks have also emerged, as payroll gains have picked up against a backdrop of constrained labor supply. Indeed, some sectors like construction that are most impacted by the immigration crackdown are showing signs of labor market tightening and wage acceleration."

The price of bitcoin fell near lows last seen in February amid the recent crypto selloff.
Credit: Photo by Tayfun Coskun / Anadolu via Getty Images

Key Takeaways

• Spot bitcoin ETFs have seen outflows for 13 consecutive trading days, with the group showing year-to-date outflows of nearly $2.3 billion, according to Farside Investors.
• Crypto enthusiasts are pointing to a slew of reasons for the crash that include Strategy's selling, the coming SpaceX IPO, and concerns about the Clarity Act not passing this year.

Bitcoin is crashing out.

The price of the world's largest cryptocurrency plunged below $62,000 overnight—almost reaching 2026 lows set in February, according to data firm Messari. Bitcoin, now just under $64,000, is down roughly 30% year to date after this week's battering—contrasting starkly with U.S. stocks, which have performed relatively well.

How bad has it been? Money has been running out of spot bitcoin funds for 13 straight trading days, dragging year-to-date net flows into the red, per Farside Investors data. Crypto derivatives markets suffered the largest liquidation event since October, according to Fundstrat, meaning that investors who used leverage to make bets on crypto futures were wiped out.

And analysts and digital asset talking heads—even those who are long-term optimistic— aren't counting out the possibility of more near-term pain.

WHY THIS MATTERS TO YOU

Bitcoin's performance this year has yet to draw in dip buyers—or inspire euphoria. That may indicate that crypto winter isn't over after all.

"We expect sentiment to remain lackluster, especially as the divergence with equity performance remains stark, absent positive news on the regulatory front or 'debasment trade' fears around fiscal positions," Citi's Alex Saunders wrote Tuesday.

Saunders believes ETF flows remain the "primary driver" for bitcoin price gains. That doesn't bode well for the cryptocurrency: More than $4 billion has rushed out of spot bitcoin ETFs since May 15, with roughly $1.4 billion occurring this week through Wednesday, according to Farside Investors' data.

Analysts and crypto enthusiasts are blaming a slew of negative developments. Strategy's (MSTR) first ever sale of bitcoin, disclosed Monday, is weighing on sentiment. There are concerns that a key piece of crypto legislation, which some analysts said was a near-term catalyst that could boost bitcoin prices, won't pass this year. And others saying that the upcoming SpaceX mega-IPO has investors moving money out of digital assets to gather dry powder.

"Obviously people are getting spooked recently with Saylor's selling," Benjamin Cowen, founder and chief of Into the Cryptoverse, a crypto analytics firm, said during an X Spaces call Thursday.

Cowen thinks progress with the aforementioned legislation could help flip the narrative. Time, however, may be running short for the Clarity Act to pass: JPMorgan's Nikolaos Panigirtzoglou wrote Wednesday that policymakers' diverted attentions to mid-term elections could "postpone progress on crypto market-structure this year," and recent statements from JPMorgan Chase Chief Jamie Dimon suggest that the banking sector, which has pushed against drafts of Clarity, isn't ready to support it yet.

Michael Saylor, executive chair of Strategy, on social media offered an explanation for the rout that amounted to people having other places they'd like to put their money: "Capital markets are funding the AI buildout," he wrote on X. "This is capital rotation, not a Bitcoin impairment."

Google parent Alphabet on Monday announced plans to sell stock to fund AI investments.
Credit: VCG / VCG via Getty Images

Key Takeaways

• Alphabet this week began selling stock to raise money for its AI investments, a move that some experts say signals the data center buildout is entering a new, riskier phase.
• AI data center spending has been a boon to the economy and stock market, fueling gains for the stocks of data center suppliers like chip designers and networking suppliers.

Investors are eager for clues that the blockbuster AI spending that has powered markets higher in recent months is slowing. They may not like everything they see.

One example: This week's move by one of the world's most profitable companies to raise money by selling stock. Alphabet (GOOG) on Monday announced a plan to sell $80 billion of stock to fund its AI infrastructure investments and meet “unprecedented customer demand” for computing power. The first $40 billion phase of the offering was “well over-subscribed,” according to CEO Sundar Pichai, allowing Alphabet to sell nearly $5 billion more than planned this week.

About $30 billion of the capital raised is earmarked for taxes, but the remainder will go toward building, equipping, and powering Alphabet's AI data centers. The company expects to invest between $180 billion and $190 billion in that infrastructure in 2026, and forecasts expenditures will “significantly increase” next year. Alphabet and its hyperscaler peers—Microsoft (MSFT), Amazon (AMZN), Meta (META), and Oracle (ORCL)—are on track to spend more than $700 billion on capital expenditures this year. 

Why This Is Important

Big tech's AI-related capex has repeatedly sparked debate about an AI bubble. In the past, bulls argued bubble fears were overblown in part because hyperscalers were flush with cash to pay for investments. Alphabet's stock sale underscores the mounting financial pressures tech companies face as they ramp up spending.

“Equity funding suggests the AI capex cycle is entering an increasingly mature and capital-intensive phase, where even cash-rich hyperscalers are increasingly tapping external capital,” analysts at BCA Research wrote Tuesday.

Hyperscalers largely paid for the AI buildout from 2023 to last year with cash from their hugely profitable businesses. The five companies reported aggregate earnings of about $400 billion last year. But their AI investments have grown even faster than their profits, forcing them to find additional sources of cash. Oracle has sold nearly $50 billion of bonds since September, and Meta in October raised $30 billion in debt. 

Alphabet is the first of the hyperscalers to sell stock to fund its AI ambitions, a development that's given some on Wall Street pause. That the company "chose equity vs. credit suggests the market has become less favorable to AI [data center] financing,” wrote Oppenheimer analysts on Monday. They argue that doesn't bode well for “weaker positioned companies” like Meta, which is spending aggressively on AI tools for internal use, unlike the other hyperscalers investing in computing capacity to be rented out. 

If Alphabet's pivot to the equity market does signal lenders' reluctance to finance more data centers, it could be a watershed moment of sorts, says Oppenheimer. “We think this could be the first catalyst to more rational spending,” the analysts wrote. 

A slowdown in AI spending could be disastrous for the AI infrastructure stocks that have carried the stock market to record highs in recent months. Shares of Broadcom (AVGO) plummeted on Thursday after the custom chip designer reiterated its AI chip revenue forecast, disappointing investors hoping for a more bullish outlook. Other high-flying AI infrastructure stocks, like Micron (MU), Corning (GLW), and Advanced Micro Devices (AMD), were also sharply lower. 

The risk that investors sour on AI spending as the buildout enters a leveraged phase is one reason BCA analysts recommend investors “rotate from AI infrastructure beneficiaries toward the AI adoption and monetization layer” that doesn't depend on ever-increasing data center spending.

Plenty of experts don't see anything ominous in Alphabet's stock sale. “Google went where the capital was cheapest, and I don't blame the company,” said Nancy Tengler, CEO & CIO of Laffer Tengler Investments. “If you're capital consumptive and it's available, take the capital,” Goldman Sachs CEO David Solomon told CNBC on Wednesday. (Goldman was one of three book runners on the stock offering.)

But others say Alphabet's stock sale could open the floodgates for similar deals. “So as not to be put at a competitive disadvantage, we cannot rule out further capital raises from other hyperscalers” looking to cash in on high stock prices and strong demand for AI exposure, wrote HSBC analysts on Tuesday.