SpaceX Completes $750 Billion Historic IPO, OpenAI and Anthropic's Massive IPOs are Ready to Go, Alphabet Plans $850 Billion Follow-on Offering.
JPMorgan Chase estimates that the net equity supply in the next two years will reach $1.5 trillion; Goldman Sachs predicts that by 2026, net supply will return from negative to zero. The era of "de-equitization," which supported the U.S. stock market's twenty-year bull run, has come to an end, and the supply shock may become a significant market obstacle.
SpaceX's record-breaking IPO, OpenAI and Anthropic's massive IPOs on the horizon, and Alphabet's $850 billion follow-on offering—a wave of equity financing comparable in scale to the dot-com bubble era is sweeping through the U.S. capital market. A core structural driver that has supported the U.S. stock market's twenty-year bull run is quietly crumbling.
On June 15, according to Bloomberg, JPMorgan Chase's data shows that in the next two years, IPOs, follow-on offerings, and other stock issuances, net of buybacks, will inject approximately $1.5 trillion of new supply into the U.S. stock market, marking the strongest net equity issuance cycle since at least the late 1990s.
At the same time, Goldman Sachs research indicates that by 2026, the net equity supply in the U.S. stock market may return from negative to near zero—a metric that has been negative since 2003 and has been one of the most important structural supports of the U.S. stock market over the past twenty years.
The core logic of this shift is: the massive capital demand driven by the AI arms race is forcing companies to shift from "buying back stocks, reducing float" to "issuing equity on a large scale, raising funds from the public."
The era once known as "stock market QE" of de-equitization has come to an end, and a new era of "re-equitization" is beginning. This means that the long-overlooked supply-side variable will once again become a key factor influencing market trends.
Twenty Years of "De-equitization": The U.S. Stock Market's Most Enduring Tailwind Suddenly Stops
For nearly two decades, the U.S. stock market has had a distinct structural feature: continuous contraction of stock supply. S&P 500 index companies have cumulatively canceled nearly $12 trillion of market capitalization through buybacks alone. Companies collectively played the role of the largest buyer in the market, and a large number of high-quality companies chose to remain private for the long term, further reducing the investable universe in the public markets.
Former Citigroup strategist and proponent of "de-equitization" concept Robert Buckland has likened this phenomenon to "quantitative easing for the stock market." He pointed out that the continuous reduction of outstanding shares by companies has been a sustained factor supporting stock prices over the past two decades.
However, this logic is now being completely disrupted by the AI wave. According to Citi data, the net buyback volume of hyperscale tech companies declined last year. Vincent Deluard, Global Macro Strategist at StoneX Financial, described this shift as a three-stage evolution:
"Initially relying on profits and free cash flow, then starting to leverage, and now it's full deployment—cash flow, debt, and equity, all in play."
Goldman Sachs research shows that by 2026, the U.S. stock market's net equity supply may return from over twenty years of negative values to near zero. George Pearkes, Macro Strategist at Bespoke Investment Group, characterized this as "late-cycle behavior" and bluntly stated "from this perspective, this is a quite negative indicator."
Super IPO Wave: SpaceX Leads the Way, Followed Closely by OpenAI and Anthropic
Last week, SpaceX completed the largest IPO in history, with an issuance size of $750 billion, soaring 19% on its first day of trading. This is just the beginning.
It is reported that around 160 companies have announced IPO fundraises exceeding $1.2 trillion so far this year, surpassing the cumulative total of the past two years. Including secondary offerings of public companies, the new stock supply in the first half of this year has exceeded $360 billion, the highest for the same period in five years.
Giant IPOs from OpenAI and Anthropic are expected to debut in the coming months. According to Ned Davis Research, the three companies—SpaceX, OpenAI, and Anthropic—may collectively raise over $170 billion in the short term.
Notably, the initial offering percentages of the three companies are all very low—SpaceX sold less than 5% of its equity, below the typical IPO level of 15% to 20%. Once the lock-up period expires and more shares enter the market, a larger-scale supply shock will be faced by the market.
According to Ned Davis Research, just a small portion of the equity of these three companies being brought to the public market is enough to offset the entire year's buyback volume of the S&P 500 index.
Blackstone President Jon Gray stated that the IPOs of SpaceX, Anthropic, and OpenAI mark a point where the IPO market has "truly found a foothold," revealing that Blackstone has already taken three portfolio companies public this year with seven more in the pipeline.
Alphabet Leads Equity Issuance: Tech Giant Shifts from "Biggest Buyer" to "Biggest Seller"
Running parallel to the IPO surge is the large-scale equity issuance by already public tech giants.
Alphabet is the most representative case. The parent company of Google, which was long its own biggest buyer of stock through buybacks, is now planning a massive $850 billion stock issuance after heavily borrowing in the U.S., Japan, and other markets to finance its AI expansion, potentially becoming one of the largest equity offerings in history. Companies like Meta are also evaluating using equity financing to support their AI spending plans.
The driving logic behind this shift lies in the changing relative cost of financing. With the current S&P 500 P/E ratio at around 25x, sitting at a rare high this century, equity financing costs have become relatively cheaper compared to debt financing.
Since the Federal Reserve raised rates to a two-decade high in 2023, the equity yield (inverse of the P/E ratio) relative to bond rates has continued to widen, even if the Fed subsequently starts cutting rates, fundamentally altering the landscape. John Luke Tyner, portfolio manager at Aptus Capital Advisors, bluntly stated:
"It seems like a lot of people are taking advantage of market financing, and they're likely not doing that because they think their stock is cheap."
Who Will Step Up? Retail Investors and Money Market Funds Become Key Variables
Facing a massive supply, the market's most critical question is: Who will take the other side of the trade?
Currently, optimism prevails. According to Bloomberg, retail trading volume currently represents about one-fifth of the total U.S. stock market volume, doubling since 2010. SpaceX allocated up to 20% of its IPO shares to individual investors, higher than the usual level.
Man Group's Chief Market Strategist, Kristina Hooper, described the current market sentiment as a combination of "FOMO (fear of missing out) and fear, with FOMO prevailing most of the time."
The massive $7.9 trillion stockpile of money market funds is also seen as a potential source of buying power. Investors suggest that it is still unclear when this wave of equity and debt issuance will start to strain the market.
However, the concentration of demand has raised concerns among some market participants. Jim Bianco, President of Bianco Research, pointed out:
"There is an infinite appetite for investments and an infinite willingness to finance in the AI space, but outside of that, most companies are essentially treading water."
Kevin Foley, Co-Head of Global Investment Banking at JPMorgan Chase, also acknowledged that current capital market activity is "quite concentrated," cautioning that "the world changes quickly, and there are still looming risks."
Historically, large-scale equity issuance has often accompanied significant investment frenzies, be it in railroads, canals, or telecommunications networks. However, history also shows that such waves often end in a bubble.
Noah Weisberger, Chief U.S. Equity Strategist at BCA Research, found through a study of 40 years of market history and around 12,000 IPOs that, in the 12 months following large IPOs, the S&P 500's performance has often lagged compared to other periods, with a median return of only 8%, and negative returns occurring in approximately 20% of cases.
"We are about to see a wave of extremely large IPOs that will only exacerbate concerns; these are not small issuances that the market can quickly absorb, and they could become significant headwinds for the market."
Charles Lemonides, Founder of ValueWorks, drew a parallel between the current situation and the late 1920s and the 1990s, comparing it to times when innovation waves led to speculative stocks and massive fundraising. "During an uptrend, companies clamor for money, and investors rush to give it because it's a gold rush, and everyone wants in."
Robert Buckland, on the other hand, has stated that he has been waiting for the equity supply to truly ramp up as a signal of pushback against this bull market. "Now, it's really starting to ramp up."
AllianceBernstein's Co-Head of the Institutional Solutions Group, Inigo Fraser Jenkins, takes a relatively moderate stance, believing that the rise in equity issuance should be understood more as a factor that suppresses future returns and increases the risk of volatility, rather than as a fundamental shift in the market landscape. "It has somewhat narrowed the path to success."
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