Pre-Market Alert
Friday, May 29, 2026 · 6:00 AM PT · Market opens 6:30 AM PT
Tone: Mixed-to-bullish. Equities pushed to fresh record highs Thursday (S&P 500 +0.58%, Nasdaq +0.91%) on Iran ceasefire hopes and strong retail earnings, but the macro backdrop just got more complicated: PCE inflation hit the highest level since 2023 and Q1 GDP was revised down. MSFT is the clear standout in the watchlist, gapping up 3.5%. Semis are green but modest.
Watchlist Alert
MSFT +3.47% — $426.99
Microsoft led the Mag 7 on Thursday with its biggest single-day gain in months. Three catalysts converged:
- Snowflake's AI inflection. SNOW's blowout Q1 declared enterprise AI demand has hit "a clear inflection point," directly answering the central question on whether $190B in MSFT AI infrastructure spend is chasing real demand.
- Pershing Square disclosure. Bill Ackman's fund disclosed a major new stake, adding institutional conviction.
- Build conference June 2–3. Reports emerged that Microsoft will unveil a new in-house AI coding model, addressing concern it ceded the AI coding market to Anthropic. This is Monday/Tuesday.
Context: MSFT is still 23% below its 52-week high of $555. Forward P/E at 22 is the cheapest since 2019. Last quarter beat: $4.27 EPS vs $4.06 est, $82.89B revenue (+18.3% YoY). The "SaaSpocalypse" trade (AI makes SaaS obsolete) may be overcooked.
MRVL Earnings Beat — Raised FY27/28 Targets
Semi Thesis Signal
Marvell reported after close May 27 and the stock is up +3.1% to $204.83 on the session. The headline is not the quarter (EPS $0.80 in-line, revenue $2.42B +28% YoY, slight beat) but the forward guide:
- FY27 revenue raised to ~$11.5B (+40% YoY), up from prior guide
- FY28 target raised to $16.5B (~45% growth), $1.5B above prior
- Data-center revenue expected up ~50% YoY, interconnect revenue up 70%+
- Expanded NVIDIA partnership; ~$1B in supply-chain prepayments to lock capacity
Rotation relevance: MRVL is not in the rotation plan but its aggressive raised targets validate the AI-driven semi demand thesis broadly. The interconnect/networking strength directly benefits AVGO (networking/custom silicon). The $1B supply-chain prepayment to lock capacity signals urgency, not a demand slowdown. This is supportive for the NVDA, TSM, AVGO, ASML thesis.
Watchlist Snapshot (May 28 Close)
Magnificent 7
MSFT
$426.99
+3.47%
NVDA
$214.25
+0.78%
AMZN
—
+0.79%
AAPL
$312.51
+0.53%
TSLA
$442.10
+0.40%
GOOGL
$390.13
+0.33%
META
$635.29
+0.01%
Semis / AI
ASML
$1,605.77
+0.49%
TSM
$424.86
+0.50%
AVGO
$426.58
+1.12%
CRWV
$106.86
+2.48%
Macro Backdrop
PCE Inflation Highest Since 2023
Thursday's data dump was a mixed bag that complicates the rate picture:
- Headline PCE: 3.8% YoY in April (highest since May 2023), up from 3.5% in March. Monthly +0.4%.
- Core PCE: 3.3% YoY (highest since Nov 2023), up from 3.2%. Monthly +0.2%.
- Q1 GDP revised down: 1.6% annualized (from 2.0% initial estimate). Slowing growth + rising inflation is the wrong direction in both dimensions.
- Personal income: Up 2.5% YoY, trailing 3.8% headline inflation. Real incomes contracting.
- Durable goods orders: +7.9% (beat 2.8% est), but driven entirely by Boeing; core capital goods orders fell 1.1%.
Rate path shift: Markets now pricing rate hike as more likely than cut for 2026. Fed Chair Kevin Warsh's first meeting is mid-June. Rates stay at 3.50–3.75% for now. A rare "wedge" is developing between core PCE (3.3%) and core CPI (2.8%), with the Fed's preferred measure running hotter. The Iran war's disruption of the Strait of Hormuz is the primary energy price driver, and tariff pass-through continues layering on top.
Catalysts Ahead
- Microsoft Build: June 2–3 (Mon–Tue). New AI coding model expected. Could extend the MSFT momentum or become a sell-the-news event.
- May Non-Farm Payrolls: June 5 (Thu). Expected 96K jobs, 4.3% unemployment. A hot print (>150K) could rattle markets on overheating fears and drive Treasury yields higher. A weak print might calm rate-hike anxiety.
- Iran ceasefire framework. Axios reported U.S. and Iran agreed on a 60-day ceasefire extension framework, though Trump hasn't approved. Oil at $89 WTI, $94 Brent. Resolution would be massively deflationary; breakdown would spike energy further.
- NVDA ex-dividend: June 4. $0.01/share quarterly (nominal).
- No watchlist earnings in next 3 days. NVDA next reports Aug 26.
Rotation Context
META → Semi Rotation Window
META closed flat at $635.29, YTD -2.3%. It has been the weakest Mag 7 name lately, down 5.4% over the past month while the S&P pushes records. Declared $0.525 quarterly dividend (ex-date June 15).
Meanwhile, the semi names in the rotation plan are all green but haven't made significant moves today. The MRVL raised guidance is the strongest near-term validation signal for the AI demand thesis supporting the rotation. Key question remains whether the hot PCE / rising rate-hike odds create near-term headwinds for high-multiple semis, or whether AI demand trumps the macro.