05/12 U.S. stock market cuts down on supply and demand of options despite controversy over continuity of AI investment and price burden

The U.S. stock market started lower on related companies following the previous day’s analysis that the dependence on external financing is increasing in the process of expanding AI investment in large technology stocks. On top of that, the consumer price index exceeding expectations and concerns over rising international oil prices due to geopolitical instability in the Middle East are also burdensome, and profit-taking sales are expanding mainly in the semiconductor industry. However, in the second half of the market, the buying of OTM call options flowed into M7 stocks, which partially affected the stability of investor sentiment, and the index closed with a reduction or a shift in the fall. In particular, the rise in pharmaceutical stocks and essential consumer goods has a positive impact on the Dow (+0.11%; Nasdaq -0.71%; S&P 500 -0.16%; Russell 2000 -0.97%, and Philadelphia Semiconductor Index +3.01%)

*Variables: AI Investment Sustainability Controversy, Consumer Price Index

In the process of expanding AI investment by big tech companies, there is an analysis that their dependence on external financing is increasing beyond their cash holdings, and controversy over the sustainability of capital expenditures has emerged. Currently, data center outstanding bonds linked to hyperscalers amount to around $455 billion, and analysts say that the credit structure is becoming more complicated by utilizing project financing (PF)-type data center lease structure in addition to the way companies issue corporate bonds themselves. Following the previous day, it is a burden to the large tech and semiconductor industries as a whole.

In particular, Oracle (-3.62%) is said to be increasing its funding cost burden, issuing project bonds at an interest rate of about 145bp higher than that of general corporate bonds. The market is paying attention to the possibility that such expansion of debt-based investment will lead to a reduction in capital expenditure in the event of a rise in interest rates or a delay in AI monetization in the future. This is not just an individual company problem, but spreads to the alertness of the overall AI infrastructure investment cycle, provoking controversy over long-term demand expectations based on a shortage of semiconductor chips.

Although the spread of AI continues to lead to positive trends such as increased token usage and increased demand for computation, there are concerns that the fact that investment funds are moving from cash-oriented reserves to external borrowing could weaken resistance to economic fluctuations. In fact, the amount of capital expenditure was around $602.8 billion in 2025 while the amount of capital expenditure was around $411.5 billion, but it is estimated that the amount of capital expenditure has expanded to the level of $775 billion in 2026, compared to $744.6 billion in reserved cash. The burden of this change in the capital expenditure structure is a factor that weakened large technology stocks in the early market today as well as the previous day. However, in the second half of the market, low-priced purchases and call option buying flowed in centered on the M7, and most of the falls were reduced or turned upward.

Meanwhile, the U.S. consumer price index rose 0.64 percent on-month and core prices rose 0.38 percent on-month in April, exceeding expectations. On a year-on-year basis, it rose to 3.8 percent and 2.8 percent, respectively, stimulating inflation. However, the market interprets this as a result of soaring international oil prices and distortion of the way housing costs are calculated rather than structural re-acceleration of inflation. The actual housing cost actually jumped 0.6 percent from the previous month, reflecting two-month data in the aftermath of the government shutdown. On the other hand, prices of new cars and rental cars fell, and prices of medical services were also showing a more limited trend than expected, which is partly a mitigating factor.

In the end, the price index shows a mixture of strong and weak goods. Rising prices of smartphones, computers and peripherals, which reflect the impact of rising clothing prices and semiconductor chip prices, are likely to increase the burden of PCE prices in the future. However, it is positive that the price shock from tariffs is gradually slowing down, and the impact of rising oil prices is still centered on gasoline and aviation oil. In the end, the CPI was a factor that weakened expectations for a rate cut in the short term, but the market is not yet interpreting it as a structural sign of inflation. In fact, the rise in U.S. Treasury yields is only 4-5bp, and the impact on risky assets is limited.

*Featured Stocks: Micron, SanDisk, Intel, etc. Decline Fall After Big Drop

Semiconductors: Nvidia Leaves For Arbitrage Vs. Options Trading Up
Nvidia (+0.61%) saw profit-taking sales for highly valued growth stocks due to rising interest rates due to the announcement of the consumer price index in early trading, and profit-taking sales, especially among semiconductor-related companies, fell. In addition, anxiety over capital spending behavior of large technology stocks is also an excuse. However, expectations have increased ahead of the earnings announcement (20th), with Wells Fargo raising its target stock price from $265 to $315, strengthening the buying spree. In particular, the change continues, with the call option transaction, which has a big impact on Nvidia’s recent rise, succeeding in the rise in the second half of the market on the back of supply and demand factors.

Semiconductors: Intel’s Short Interest Increase, Broadcom Target Shares Goes Up For Profit
Intel (-6.82%) has recently continued its explosive rise, with its short selling ratio hitting a 52-week high, and some analysts saying that Intel is a prime example of current momentum investment but will stop at some point. AMD (-2.29%) also raised its target stock price to 500 dollars, while Broadcom (-2.13%) also raised its target stock price to 500 dollars, but when capital expenditure issues came back, it was sluggish due to profit-making sales. However, in the second half of the market, the fall was reduced due to supply and demand factors such as option trading

Semiconductor Storage: Profit-taking Sale
Micron (-3.61%) also fell on news that it has begun offering 256GB DDR5 RDIMM samples for next-generation AI data centers to major server partners. Although Big Tech’s capital expenditures have expanded and surged due to the lack of memory supply, it has been highlighted that it is the result of debt investment, not cash on hand, and this limits the possibility of expanding long-term spending. However, the fall was reduced in the afternoon due to the supply and demand impact of increased options trading and the influx of backlash buying. Other storage companies such as SanDisk (-6.17 percent), Western Digital (-5.25%) and Seagate (-3.02%)