Semiconductor stocks have been taking a beating, and Fundstrat’s Tom Lee thinks he knows why. It’s not a fundamental collapse in chip demand or some sudden AI disillusionment. It’s SpaceX.

Lee’s thesis is straightforward: institutional investors are liquidating their winning positions in chip and tech stocks to raise capital for SpaceX’s IPO, which is priced at $135 per share and targeting a raise of $75 billion.

The largest IPO in history creates a gravitational pull

SpaceX’s offering is being described as the largest IPO in history, and it’s reportedly multiple times oversubscribed. The anticipated post-IPO valuation sits somewhere between $1.77 trillion and $1.8 trillion.

Lee characterizes the current sell-off as “jitters” and frames it as a healthy consolidation rather than the beginning of something uglier. In his view, the rotation out of previous market winners into SpaceX is temporary, and the excitement generated by a successful IPO could actually reinvigorate the broader tech sector once the dust settles.

Not everyone is buying Lee’s optimism

Doug Kass of Seabreeze Capital isn’t having it. Kass has pushed back on Lee’s outlook, characterizing it as a “perma-bull” perspective. His concern is that the current volatility might signal something more meaningful, specifically a near-term peak in markets rather than a brief and healthy pause.

Lee himself has acknowledged the potential risk of insider shares unlocking worth approximately $1.7 trillion after six months. Look at what happened to Facebook in 2012 when its lockup expired. The stock cratered before eventually recovering.