JPMorgan data show hedge funds cut positions in the biggest U.S. tech names, with some adding bearish bets, just before SpaceX began trading Friday
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Since June 5, the Roundhill Magnificent Seven ETF — a fund that follows Apple $AAPL, Amazon $AMZN, Microsoft $MSFT, and other mega-cap tech companies — has lost more than 2.4% of its value. The JPMorgan note said software stocks were sold heavily late last week, while investors showed stronger demand for semiconductor makers. Financial firm-themed ETFs were the most purchased over the same period.
Retail investors appear to be following a similar playbook. Vanda Research data show that amateur investors ran a three-day streak of net selling in individual stocks through Wednesday — a pattern last seen in March 2020 — with chipmakers and high-flying AI plays absorbing the bulk of the outflows. Monday's withdrawals from individual stocks by retail participants were the heaviest Vanda had recorded since November 2023, according to Bloomberg.
"Evidence so far is that retail may be saving some dry powder for these upcoming IPOs," Vanda global macro strategist Viraj Patel said. "At this point in the calendar year, we would normally expect slightly stronger activity than what we're currently seeing — and so something seems to be holding retail back."
The retreat from popular AI trades is not confined to individual investors — Vanda told Business Insider that larger institutional players are also showing fatigue in heavily-owned AI names, and that bearish traders appear emboldened to re-enter the unprofitable end of the technology sector.
"Investors will have to free up capital from all of their public company holdings, especially in technology and including the largest ones, in order to fund their investments in these IPOs," Gil Luria, head of technology research at DA Davidson & Co., said.
SpaceX filed terms for its IPO at a fixed price of $135 per share, aiming to sell 555,555,555 Class A shares and raise close to $75 billion at a valuation of approximately $1.75 trillion — which would make it the seventh-largest publicly traded U.S. company by market value. The company posted a net loss of $4.94 billion in 2025 on revenue of $18.67 billion. SpaceX is reserving up to 30% of the offering for retail investors, a higher proportion than is typical for major IPOs, and Fidelity lowered its minimum investment requirement to $2,000 specifically for this deal.
The selling pressure is not limited to the SpaceX offering. Anthropic and OpenAI are both expected to go public later this year, and analysts said investors may need to continue freeing up capital to participate in those deals as well.
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