SpaceX completes its record-breaking $750 billion IPO, OpenAI and Anthropic are poised for massive IPOs, and Alphabet is planning an $85 billion stock offering.
JPMorgan calculates that net equity supply will reach $1.5 trillion in the next two years; Goldman Sachs expects net supply to return to zero from negative territory by 2026. The 'de-equitization' era that supported the two-decade-long bull market in US stocks is officially over, with supply shock potentially becoming a major market headwind.
SpaceX's record-setting listing, OpenAI and Anthropic's imminent mega IPOs, Alphabet's planned $85 billion stock issuance – a wave of equity financing comparable to the internet bubble era is sweeping across the US capital markets. A core structural driver that underpinned the US stock market's long bull run over the past two decades is quietly unraveling.
On June 15th, according to Bloomberg, JPMorgan's calculations show that over the next two years, after accounting for buybacks, IPOs, secondary offerings, and other stock issuances will inject a net new supply of approximately $1.5 trillion into the US stock market, marking the strongest net equity issuance cycle since at least the late 1990s.
Simultaneously, Goldman Sachs research indicates that the net equity supply in the US stock market may return to near zero by 2026 – a metric that has remained negative since 2003 and has been one of the most important structural supports for US stocks over the past twenty years.
The core logic behind this shift is: The massive capital demands fueled by the AI arms race are forcing companies to pivot from "buying back shares and shrinking the float" to "issuing equity on a large scale and raising funds from the public."
The era of de-equitization, once called the "QE for stocks," is over, and a new era of "re-equitization" is beginning. This means the long-overlooked variable of supply will once again become a key factor influencing market direction.
Two Decades of 'De-Equitization': The End of a Persistent Tailwind
For nearly two decades, the US stock market had a distinct structural feature: persistent shrinkage in stock supply. S&P 500 component companies alone have retired nearly $12 trillion in market capitalization through buybacks. Companies collectively played the role of the market's biggest buyer, while many high-quality firms chose to stay private for a long time, further shrinking the pool of investable assets in the public market.
Robert Buckland, former Citigroup strategist and proponent of the "de-equitization" concept, likened this phenomenon to "quantitative easing for the stock market." He noted that companies' continuous reduction of outstanding shares was a sustained factor providing systematic support for stock prices over the past twenty years.
However, this logic is being completely overturned by the AI wave. According to Citigroup data, net buyback volume by hyperscalers has already declined last year. StoneX Financial global macro strategist Vincent Deluard describes this transition as a three-stage evolution:
"First it's out of profit and free cash flow, then they start borrowing, and now it's all of the above -- cash flow, debt, and equity."
Goldman Sachs research shows that the net equity supply in the US stock market may return to near zero by 2026, after over two decades of being negative. Bespoke Investment Group macro strategist George Pearkes characterizes this as "late-cycle behavior" and bluntly states that "in that light, it's a pretty negative signal."
Super IPO Wave: SpaceX Leads the Charge, OpenAI and Anthropic to Follow
Last week, SpaceX completed the largest IPO in history, raising $75 billion (Note: Corrected figure; context suggests it's likely a typo in the original Chinese, as 750亿美元 is $75 billion, not $750 billion) and surging 19% on its first trading day. This is just the beginning.
Reportedly, about 160 companies have announced plans to raise over $120 billion through IPOs this year, surpassing the combined total of the past two years. Including secondary offerings by listed companies, new stock supply in the first half of this year has exceeded $360 billion, the highest in five years for the same period.
Mega IPOs by OpenAI and Anthropic are expected to follow in the coming months. According to Ned Davis Research estimates, SpaceX, OpenAI, and Anthropic could collectively raise over $170 billion in the near term.
Notably, the initial float offered by these three companies is extremely low – SpaceX sold less than 5% of its equity, below the typical 15% to 20% for IPOs. Once lock-up periods expire and more shares enter circulation, the market will face an even larger supply shock.
Ned Davis Research calculates that floating just a small portion of the equity from these three companies would be enough to offset a full year of S&P 500 buybacks.
Blackstone President Jon Gray said the listings of SpaceX, Anthropic, and OpenAI mark a point where the IPO market has "really found its footing," revealing that Blackstone has had three portfolio companies go public this year, with seven more in the pipeline.
Alphabet Leads Secondary Offerings: Tech Giants Shift from 'Biggest Buyer' to 'Biggest Seller'
Running parallel to the IPO wave are large-scale secondary offerings by already-listed tech giants.
Alphabet is the most representative case. The Google parent, once a long-term major buyer of its own stock through buybacks, after heavily borrowing in markets like the US and Japan to fund AI expansion, is now further planning a stock offering potentially as large as $85 billion (Note: Corrected figure as per typical scale; 850亿美元 in the original text is likely a typo for $85 billion), potentially one of the largest secondary offerings in history. Meta and others are also evaluating equity financing to support AI spending plans.
The logic driving this shift lies in changing relative financing costs. With the S&P 500 trading at a price-to-earnings ratio of around 25, a rare high for this century, the cost of equity financing has become cheaper relative to debt financing.
Since the Fed pushed rates to a two-decade high in 2023, the advantage of stock yields (the inverse of the P/E ratio) over bond yields has widened, a dynamic that persisted even after the Fed began cutting rates. Aptus Capital Advisors portfolio manager John Luke Tyner puts it bluntly:
"It just feels like there are a lot of people tapping the market for money, and they're doing so, most likely, not because they think their stock is cheap."
Who Will Buy? Retail Investors and Money Market Funds as Key Variables
Facing this immense supply, the market's core question is: Who will buy?
For now, optimism remains dominant. According to Bloomberg, retail trading volume now accounts for about one-fifth of total US stock trading volume, double the level of 2010. SpaceX allocated a high 20% of its IPO shares to individual investors, above typical levels.
Man Group Chief Market Strategist Kristina Hooper characterizes current market sentiment as "FOMO (fear of missing out) meets fear, and more often than not, FOMO is winning out."
The nearly $7.9 trillion stockpile in money market funds is also seen as a potential source of buying power. Investors note it remains unclear when this flood of equity and debt issuance might start to upset the market's digestion.
However, the concentration of demand raises flags for some market watchers. Bianco Research President Jim Bianco points out:
"There is unlimited investor appetite for AI and unlimited willingness to finance, but outside of that, everyone else is basically treading water."
JPMorgan Global Investment Banking Co-Head Kevin Foley also concedes that current capital markets activity is "pretty concentrated" and warns that "the world can change quickly, and there are still risks out there."
Historically, large-scale equity issuance often accompanies major investment booms, from railroads and canals to telecom networks. But history also shows that such waves often end in bubbles.
BCA Research Chief US Equity Strategist Noah Weisberger, after studying 40 years of market history and about 12,000 IPOs, found that in the 12 months following large IPOs, the S&P 500 tends to underperform other periods, with a median gain of just 8%, and negative returns occurring in about 20% of cases.
"What's coming is a batch of extremely large IPOs, and that only heightens the concern that these aren't small issues that the market can quickly digest, they could be material headwinds for the market."
ValueWorks hedge fund founder Charles Lemonides compares the current situation to the late 1920s and the 1990s, when waves of innovation fueled speculative stocks and massive financing, "On the way up, companies are fighting to take the money, investors are fighting to give it, because it's a gold rush and everybody wants in."
Robert Buckland states plainly that he has been waiting for equity supply to truly start ramping up as a signal to fight this bull market. "Now, it's actually ramping up."
AllianceBernstein Co-Head of Institutional Solutions Inigo Fraser Jenkins takes a more moderate stance, arguing that rising equity issuance should be understood more as a risk factor that dampens future returns and increases volatility, rather than a fundamental, game-changing watershed. "It narrows the path to success in some ways."
