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The rally reflected strong risk appetite, led by large-cap technology stocks and semiconductor shares. The Dow crossing 52,000 marks a symbolic milestone, while Alphabet replacing Verizon in the Dow highlights the index’s increasing exposure to technology. Alphabet’s gains and Verizon’s decline also illustrate how index changes can influence short-term trading, reinforcing the growing weight of mega-cap tech in shaping broader U.S. market performance.

Friday capped a challenging week for U.S. equities, with the Nasdaq extending its losing streak to five sessions as investors rotated away from Big Tech amid concerns over rising AI data-centre spending. Despite the pullback, AI investment continues to accelerate, highlighting confidence in long-term demand. Meanwhile, softer-than-expected May PCE inflation data provided modest reassurance that price pressures may be easing, offering some support for the broader market outlook.

While the broader market ended largely unchanged as weakness in major technology stocks weighed on indices, Micron delivered exceptionally strong earnings that lifted sentiment across the semiconductor sector. Robust data-centre growth, record financial results and upbeat guidance reinforced confidence in AI-driven memory demand, triggering a sharp after-hours rally in Micron and supporting gains across chipmakers despite an otherwise subdued trading session.

Micron’s results significantly exceeded expectations, highlighting the strength of AI-driven memory demand. Revenue, profitability, and forward guidance all point to accelerating growth and tight supply conditions, reinforcing optimism across the semiconductor sector. However, the cautious market performance before earnings suggests investors were balancing strong AI fundamentals against broader valuation and macroeconomic concerns. The report may improve sentiment toward AI-related technology stocks if demand trends remain sustainable.

The selloff reflects growing investor concern that AI-driven memory demand may be moderating sooner than expected. Reports of slower HBM4 production from SK Hynix and reduced forecasts for Nvidia’s Rubin platform raised doubts about the sustainability of the AI hardware boom, hitting memory stocks particularly hard. However, broader market declines remained relatively contained, suggesting investors are reassessing growth expectations rather than pricing in a major downturn.

Micron led the market after announcing a strategic partnership with Anthropic, reinforcing investor confidence in demand for AI-related memory products such as HBM, DRAM, and SSDs. The stock reached a record high ahead of earnings, with options markets anticipating significant volatility. Despite Micron’s strength, broader technology megacaps weighed on major indices, pushing the Nasdaq and S&P 500 lower. In contrast, small-cap stocks outperformed, with the Russell 2000 surpassing 3,000 for the first time. The session reflected a divergence between AI-driven semiconductor optimism and weakness among large-cap technology names.

The market’s late-week rally was overshadowed by a more hawkish Federal Reserve outlook. While equities gained on strength in semiconductor stocks, investors focused on the Fed’s revised projections, which indicate higher expected rates and persistent inflation concerns. Chair Kevin Warsh’s decision not to provide a personal rate forecast, alongside plans to reform Fed operations, adds uncertainty. Rising short-term Treasury yields and weaker futures suggest markets are reassessing expectations for monetary policy easing.

The Fed’s latest dot plot suggests policymakers remain cautious on inflation, with a growing minority expecting further tightening in 2026. The risk is that rates stay restrictive just as growth and labour markets soften, but easing too early could reignite price pressures. SpaceX’s pullback looks more like profit-taking after a strong run and lofty expectations; whether it becomes something larger depends on execution and valuation support. In Singapore, AI-driven memory demand benefits semiconductor-linked names such as UMS Holdings, AEM Holdings and Venture Corporation. Sustainability hinges on whether AI infrastructure spending remains robust beyond the current investment cycle.

The pullback in AI-linked semiconductors looks more like a valuation reset than a definitive end to the AI storage cycle. After a rapid, momentum-driven rally, investors appear to be reassessing earnings delivery versus expectations. A hawkish tone from a first FOMC chaired by Warsh could reinforce risk-off sentiment, particularly for rate-sensitive SG REITs and high-yield sectors if rate cuts are pushed further out.

Storage remains one of the market’s strongest AI themes, with investors betting that rising data creation and inference workloads will drive a multi-year demand cycle. However, after sharp gains across the sector, valuations leave less room for disappointment. Nvidia’s heavily oversubscribed bond issuance appears more like balance-sheet optimisation than a liquidity need, allowing it to preserve cash while locking in attractive funding.

SpaceX’s surge reflects both scarcity and narrative. A limited free float can amplify demand and support elevated valuations initially, but sustaining a >USD 2 trillion valuation will likely require execution, revenue growth, and broader institutional participation once liquidity increases.

The SaaS sell-off appears driven more by repricing than proof of obsolescence. AI may compress some software categories, but enterprise adoption is likely evolutionary rather than immediate. Current weakness could reflect excessive pessimism, though companies with weak AI strategies face genuine long-term risk.

SpaceX’s surge reflects both scarcity and narrative. A limited free float can amplify demand and support elevated valuations initially, but sustaining a >USD 2 trillion valuation will likely require execution, revenue growth, and broader institutional participation once liquidity increases.

The SaaS sell-off appears driven more by repricing than proof of obsolescence. AI may compress some software categories, but enterprise adoption is likely evolutionary rather than immediate. Current weakness could reflect excessive pessimism, though companies with weak AI strategies face genuine long-term risk.

TSMC’s reported pricing power and the sharp semiconductor rally suggest AI infrastructure demand remains robust, but one strong session alone does not confirm a durable trend reversal. For SpaceX, a $1.75 trillion valuation and very limited float could drive extreme volatility, making patience for price discovery a reasonable approach over chasing the open. Adobe’s reaction, alongside recent moves in Oracle and SMCI, indicates investors are becoming less tolerant of execution, capital allocation, and leadership uncertainty. Screening AI names may increasingly require focusing not only on growth, but also on management stability, capital discipline, and earnings visibility.

The three developments point to increasing geopolitical and capital-market complexity rather than a clear directional shift. For Singapore exporters, a proposed tariff would be a sentiment headwind if implemented, but exposure depends on company-specific US revenue concentration and supply-chain positioning. SpaceX’s India setback may slow one growth avenue for Starlink, but it does not materially alter the broader global demand thesis. At a US$1.75 trillion valuation, execution expectations are already extremely high. Meanwhile, the Broadcom–Apollo–Blackstone initiative suggests AI infrastructure is maturing into an institutional asset class.