Retail traders’ infatuation with high-flying computer memory and storage companies is fading now that the next big thing — SpaceX’s initial public offering — is on the way.
The do-it-yourself crowd has been paring its exposure in semiconductor stocks and refraining from buying dips elsewhere, according to data compiled by Vanda Research Ltd. While the sellers may be merely ditching AI-linked stocks after big gains, some analysts see it as a sign the group is gathering dry powder for SpaceX’s public debut.
Few companies have generated as much euphoria ahead of their IPOs as SpaceX, and retail traders, many of whom are die-hard fans of Elon Musk, want a piece of it. Whether ditching AI winners for a rocket company that’s yet to turn a profit turns out to be a winning bet remains to be seen. Regardless, most analysts agree that the setup as a recipe for more price swings ahead.
“Selling existing stocks, tech and non-tech, could lead to issues and volatility down the line through the rest of the year,” Douglas Beath, global equity strategist at Wells Fargo Investment Institute, said by phone. The offering plus two other upcoming mega IPOs, as well as huge stock sales from existing tech companies, are likely to fan volatility at a time when household stock exposure is sitting near a record, he added.
Non-professional traders have sold individual stocks for three consecutive days through Wednesday, in the first such occurrence since March 2020, according to data compiled by Vanda, which tracks retail investor flows. Selling has been concentrated in chipmakers and recent AI winners, the data show.
“Evidence so far is that retail may be saving some dry power for these upcoming IPOs,” said Viraj Patel, global macro strategist at Vanda. “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.”
On Monday, retail traders pulled the most cash from individual stocks since November 2023, Vanda’s data show. The next day, when technology names led a rout in the S&P 500 Index, retail investors were again sitting on the sidelines.
Selling Recent Winners
A recent drop in retail favorite Micron Technology Inc. may be evidence of individual investors “selling flows in recent winners and levered products” to invest in SpaceX, Greg Boutle, US head of equity derivative strategy at BNP Paribas, said on Friday.
To be sure, other factors could be at play, including a sense of fatigue over the AI hype in the market and worries that it will not deliver the promised seismic changes to the economy.
Space-related stocks is one group that’s bucked the risk-off trend, with data from Vanda showing the highest appetite among retail traders since 2024.
Patel is far from alone in seeing investors scale back stock exposure ahead of the record-setting SpaceX IPO, and the potential for more selling ahead of the next big deals this year, including from Anthropic and Sam Altman’s OpenAI.
“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 in a Bloomberg TV interview.
Micron was among the worst performers in the S&P 500 during Tuesday’s selloff in technology stocks, alongside names like Super Micro Computer Inc., Qualcomm Inc. and Advanced Micro Devices Inc. Selling pressure continued on Wednesday, when Micron lost 4.7%, Qualcomm shed 6.9% and Broadcom Inc. fell 5.1%.
‘Some Indigestion’
To Beath, retail investors’ selling ahead of an IPO is unlikely to spark a sustained drop in US equities, or mark a near-term top. However, he said that retail traders “make up a good chunk” of the so-called fast money and may exude significant influence in the short run.
Stocks make up nearly 35% of US households’ total financial assets, an all-time high, which suggests amateur investors may “sell existing holdings to fund these new positions,” Beath said. The setup may “cause some indigestion” for the market, he added.
Retail investor participation has slipped to start the year, to be sure, in a development that JPMorgan Chase & Co. analysts pinned on a long-term downtrend since the peak of the so-called meme mania in early 2021. Retail investors accounted for 17% of US equity volume in the first quarter 2026, down from nearly 21% a year earlier, data compiled by Bloomberg Intelligence show.
Still, those investors are expected to participate in the SpaceX IPO at higher levels than in previous deals as the company has made more shares available to individual investors. Fidelity lowered the threshold its customers needed to have in retail brokerage accounts to just $2,000 to participate in the deal. SpaceX is said to be reserving at least 20% · of the offering for individual investors as the offering was attracting more than $70 billion in orders from retail investors.
Vanda’s Patel said it’s not a question of whether retail investors are going to buy into the SpaceX deal, but how they would do it — either by adding new positions or more aggressive selling of recent winners in chips and other AI proxies.
“Last week’s selloff and a short-term peak in the AI narrative has seen retail use this opportunity to take profit and sell winners,” he said.