Semiconductors are ripping, trillion-dollar valuations are becoming the norm, and now the most hyped IPO in years is looming. So… is this the moment everything peaks? On this episode of In the Money with Amber Kanwar, Mark Sebastian, Founder of Option Pit, returns with a view of a market that’s moving faster—and getting more crowded—by the day. From Micron’s explosive run to Nvidia’s “vampire trade” losing steam, Mark explains how capital is rotating across semis in real time—and why he’s not shorting this market, even as signs of froth start to build.
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I took my eldest to her first concert last night. Punjabi singer Diljit Dosanjh performed for a sold out crowd in Toronto last night. It felt so special to share that moment with her and I hope the memory of dancing with her mom will stay with her forever. And the memory of saying Taylor Swift would be better and asking to go home every 20 minutes doesn’t stick.
Here are five things to know:
Stay in May: Stocks are starting a new trading month on the front food with gains across the board. This comes after a rip-roaring May (aren’t you glad you didn’t go away?) with the S&P 500 up 5%, the Nasdaq up 7.5% and the TSX along for the ride +2.5%. Iran remains unsettled, but the markets are betting it will come to an end and are moving on. Key risk? That doesn’t happen. Another key risk? AI hyperscalers stop spending. The equal-weight version of the S&P 500 which neutralizes the impact of AI is only up 3% over the past month. Jim Reid at Deutsche Bank summarized the month well “Where oil slipped, AI ripped.”
Greg the builder: Berkshire Hathaway is buying homebuilder Taylor Morrison Home Corp in a $6.8 billion deal, the first major transaction under new CEO Greg Abel. Berkshire’s offer is $72.50 per share, a 24% premium to Friday’s close. The stock has underperformed the market over the past year as housing has stalled under elevated interest rates. On a multiple basis, Taylor Morrison is being purchased at slight premium to its historical tangible book value but cheaper than peers and comparable deals. But Berkshire seeing value is lighting a fire under the sector with KB Home, Lennar and Pulte all higher by 2% in the pre-market. I’ve been waiting for a turning point in the sector, is this it? Amidst the weakness in housing, we’ve seen a spate of deals and Berkshire’s bid here is the third major public takeout of the year (Sumitomo buying Tri Pointe Homes and Dream Finder’s hostile bid for Beazer Homes). RBC is out this morning cautioning getting too excited about this. “We expect this to be viewed as a positive for builders trading at/below 1x (tangible book value), and (Berkshire’s) involvement may lift the space more broadly, but the modest takeout premium is less constructive for larger peers already commanding significant premium TBV multiples (DHI, LEN, PHM, TOL),” wrote RBC’s Mike Dahl.
Nvidia we trust: Nvidia is making waves in tech right now denting the PC chip makers while lifting up the software stocks. Nvidia said it was entering the PC market with a new chip and shares of Intel (-6%), Qualcomm (-7.6%) and AMD (-4%) are under pressure as a result. Nvidia’s new chips will debut in Dell and Lenovo computers. The market likes it with Nvidia up 2% in the pre-market. Software stocks are ripping higher this morning after Nvidia’s CEO, Jensen Huang, said “this is actually an incredible time to be a software company,” during a keynote in Taiwan. Shares of ServiceNow (+8%), Adobe (+6%), Salesforce (+5%), Workday (+6%), and Microsoft (+4%) are all pumping. Software stocks bottomed in April and are up 26% from the low but still off about 13% from the record high in 2025. Maybe Huang’s comments will be the catalyst to get there.
Shuffling the decks: Scotia is downgrading CIBC and upgrading BMO after last week’s earnings from the Canadian banks. CIBC still has a favourable medium term outlook, says Scotia’s Mike Rizvanovic, but he thinks outperformance relative to peers will moderate in the quarters ahead. A combination of diminished margin expansion which has driven the stock, downside risk in capital markets, and more exposure to Canadian lending are all factors leading to the downgrade. BMO, on the other hand, has lending upside with US exposure and momentum toward their 15% ROE target. Bank earning season in general featured strong earnings beats aided by market sensitive areas like capital markets and wealth management. There was little reaction to positive earnings reports and strong negative reactions to imperfections. “While Capital Markets businesses beat expectations, two offsetting issues were more influential: 1) margin compression in most cases; and 2) ongoing deterioration in consumer credit metrics. These issues could weigh on the sector for the foreseeable future, which reinforces the defensive posturing of our stock ratings,” wrote Gabriel Dechaine of National Bank. His only buy rated stocks are TD and Royal Bank.
Make it rain: Apotex has filed for an IPO in what could be the biggest debut since 2021. The Canadian generic drugmaker is seeking to raise $1.15 billion in a deal priced between $20-$24/a piece. Apotex was sold to private equity SK Capital Partners in 2023, several years after the still unsolved deaths of founder Barry Sherman and his wife Honey Sherman in 2017. The last IPO of this size of Definity Financial which raised about $1.6 billion and has tripled since then. It also signals that the drought of TSX IPOs may be ending following the IPO of Lumina Metals and Xanadu Quantum (via SPAC) earlier this year.
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