As Figma’s IPO Soars, Investors Still Love Big Tech

Key Takeaways

• Shares of Figma surged 250% in their Thursday debut, more than tripling the IPO price.
• The blowout performance comes against the backdrop of a major rebound in technology stocks, which stumbled at the start of the year.
• Analysts say this shows a continued appetite for risk among investors, even against the background of a slowing economy, stretched tech valuations, and new tariffs.

Shares of design software maker Figma FIG surged in their debut on the New York Stock Exchange on Thursday, closing at $115.50 each, more than triple the IPO price of $33.00. Shares held onto their gains on Friday, even as the broader market sold off following surprisingly weak economic data.

Despite mounting headwinds like a slowing economy and stretched valuations, analysts say Figma’s strong performance is a sign that investors are still risk-on when it comes to the technology sector. This has also stoked optimism about the potential for a rebound in the IPO market, which has been relatively sluggish in the first half of the year. “Bottom line, risk appetite is healthy, and there is still good demand for unique platform assets with good growth,” says Eric Compton, Morningstar’s director of equity research for technology.

Big Tech Continues to Rebound

Figma’s blockbuster debut comes against the backdrop of a powerful rally in the tech sector. The Morningstar US Technology Index is up roughly 23% over the past three months, compared with a 14% gain for the broader Morningstar US Market Index. Those returns have come on the heels of a major rout for the sector at the beginning of the year, when trade and geopolitical uncertainty sent investors searching for safety and away from riskier assets.

Mega-cap tech stocks have accounted for the lion’s share of the market’s gains in the wake of the swift selloff in early April, when President Donald Trump upended global financial markets with his announcement of tariffs that were significantly higher than expected.

This week has brought a series of blockbuster earnings from mega-cap tech firms like Microsoft MSFT and Meta Platforms META, which climbed even as the broader market struggled on Thursday.

Figma’s debut “reminds us that investors still have this Pavlovian instinct to gravitate towards tech,” says Mark Hackett, chief market strategist at Nationwide. “When things are good, buy tech. When things are bad, buy tech.”

Active Investors Jump In

Steve Sosnick, chief strategist at Interactive Brokers, sees evidence that active investors like hedge funds and retail investors are driving stocks such as Figma higher. “In general, we’ve seen no shortage of situations where traders get enthusiastic about a company (sometimes for good reason, sometimes just because of hype and chatter), and those rallies tend to shoot up faster and further than one might otherwise expect,” he says.

Sosnick points to the “meme stock” discussion that reemerged surrounding names like Kohl’s KSS last week as another example of the phenomenon. “It’s telling me that active traders are more than willing to seek out fast-moving situations and participate in them,” he says, either by buying dips when stocks are falling or chasing rallies when stocks are rising. “We’ve seen a remarkable amount of risk tolerance.”

Hackett agrees: “When you start seeing IPOs tripling, that is very unusual. It tends to happen when investors are in the risk-on mindset.”

What’s Ahead for Tech Stocks

Analysts don’t expect tech’s momentum to fade in the near term. “Can tech continue to lead us? I don’t see why not,” says Sosnick of Interactive Brokers. He adds that unique risks accompany a market that’s heavily concentrated in a small number of stocks.

Nationwide’s Hackett says tech’s fundamentals remain strong, especially among the mega-cap names. “These are tremendously good companies with very good competitive positions, strong balance sheets, and good cash flow generation,” though he points to elevated tech valuations compared with the rest of the market as another risk.

Overall, Figma’s IPO “could be viewed as a milestone in the ongoing recovery of the tech sector and risk appetite more broadly,” says Morningstar’s Compton. He points to the recent recovery of CoreWeave CRWV, another high-profile tech IPO, as more evidence. “Investors are watching high-growth, design-forward software as a service names like this to see if there’s real public market appetite again for preprofit companies with strong product-market fit. The strong debut would be positive for SaaS companies more broadly and could boost sentiment for similar firms like Adobe ADBE, Canva, or Notion,” he adds.