While it’s reasonable to assume these IPOs will only fuel enthusiasm for equities, beware the aftershocks. It’s possible active investors, leery of too much artificial intelligence (AI) exposure, will trim related names — Alphabet seems especially vulnerable given the run it’s had since mid 2025 and its model overlap with Anthropic and OpenAI.
Indeed, we’ve wondered whether we might have already suffered a few foreshocks as SpaceX readied its launch in the form of a brief but intense sell-off in areas where valuations had recently run higher, like semiconductors and memory chips. But it’s the names the indexes could drop to make room for this triple threat, or those that suffer the biggest dilution within the indexes as they elbow their way in, that could see the greatest amount of selling pressure. While that puts the names at the bottom of the table in each of these indexes at risk for relegation, it’s the names toward the top of the list — companies like Nvidia, Apple, Microsoft, and Alphabet — that might see even more intense pressure as their index weights are recalculated to make room.
As we think about this IPO bonanza, it’s not just the market reordering that comes to mind. It’s also the transparency these IPOs bring to the AI trade. One of the biggest questions investors have had focuses on the actual dollars spent on AI, both by consumers and by businesses. With the model businesses going public, we’ll get a look at their earnings on a regular basis and gain a clearer view into the growing AI implementation, for better or for worse.
But there’s an even more foundational question that looms in our minds. Given the heft of these businesses, and the growing influence they will have on public markets as they increase their float, their fundamental prospects matter. What do investors assume about their growth prospects that justify their IPO valuations? And what does that mean for their performance from here?
It’s these questions around fundamentals that animate the rest of our Research Spotlight: The IPO Triple Threat.
Let’s start with a list of “similars” — firms that have gone public in (relatively) recent memory that share some of the characteristics with our Big Three. That’s a more nuanced analysis than it sounds: Forget for a moment that a company like SpaceX has no perfect peer (after all, its most critical business segment involves launching things into space) and consider instead what matters most following a public listing. It’s not necessarily a company’s business model or the sector it competes in that matters most, but instead things like its pre-IPO “scarcity value,” or strategic significance, and the intensity of the narrative surrounding it.
