In the Loop – June 5, 2026

Markets pulled back sharply on Friday as stronger-than-expected economic data pushed Treasury yields higher and reduced expectations for near-term Federal Reserve rate cuts. The reaction was felt most acutely in technology and semiconductor stocks, which have led the market higher throughout the AI-driven rally. Broadcom’s earnings and outlook also contributed to profit-taking across the semiconductor complex, providing a catalyst for investors to lock in gains after an extraordinary advance.

From a technical standpoint, the pullback is not unexpected. Many semiconductor and AI infrastructure stocks have posted gains of 50% to 100% in a matter of weeks, leaving sentiment stretched and positioning crowded. Historically, periods of rapid appreciation are often followed by corrections of 5% to 10%, even during powerful bull markets. Importantly, market breadth held up far better than the headline indexes suggested, indicating that selling was concentrated in a handful of large technology names rather than representing broad-based liquidation across the market.

Investors often ask whether a sharp Friday decline marks a market bottom. History suggests there is no consistent pattern. While some corrections end on Fridays, many require several additional trading sessions for institutional investors to complete repositioning and for buyers to re-emerge. The more important signals will be whether Treasury yields stabilize, whether semiconductor leaders such as NVIDIA, Broadcom, AMD, and Micron begin to find support, and whether broader market participation remains healthy.

Our base case is that this represents a consolidation within an ongoing bull market rather than the beginning of a major downturn. The fundamental drivers behind the AI infrastructure buildout remain intact, corporate earnings continue to grow, and capital spending plans from hyperscalers remain near record levels. In fact, some of the strongest bull markets in history have experienced multiple sharp pullbacks along the way. While additional volatility over the next several days would not be surprising, we view this move as a healthy reset after one of the most powerful technology rallies since the late 1990s rather than a change in the long-term investment outlook.

Markets rarely move in a straight line. After an exceptional run in AI and semiconductor stocks, a period of consolidation is both normal and constructive. We remain focused on the long-term themes driving our portfolios and view volatility as a feature of investing, not a flaw.

One of the week’s most important developments was Alphabet’s announcement of an $80 billion capital raise to accelerate its AI infrastructure buildout. Rather than signaling weaker demand, the move reinforces a key theme we have discussed for months: demand for AI computing capacity is growing faster than available supply. The industry’s biggest challenge today is not finding customers—it is building enough power generation, data centers, networking equipment, advanced semiconductors, and packaging capacity to meet demand. This continues to support our focus on companies occupying critical bottlenecks throughout the AI ecosystem.

The market is also beginning to shift from the “AI excitement” phase to the “AI execution” phase. Investors are increasingly focused on which companies can successfully deliver the infrastructure required to support the next wave of AI adoption. In many ways, today’s environment resembles past industrial buildouts where the greatest opportunities emerged among the companies providing the essential tools, equipment, and infrastructure needed to enable growth.

Looking ahead, investors are preparing for what could become one of the largest and most anticipated public offerings in market history as SpaceX moves closer to an IPO. Beyond the excitement surrounding the company itself, a successful offering would signal strong investor appetite for innovation, technology, and long-term growth opportunities. It could also help reopen the IPO market for a new generation of private technology leaders.