On Wall Street, the acronym IPO has long carried a second meaning among the skeptical: It’s Probably Overpriced. For most of the past decade, that cynicism was well-earned. The 2021 SPAC mania brought more than 1,000 companies to market in a single year, including electric vehicle startups without a car in production and blank-check companies promising to find the “next big thing.” Most burned investors badly.
A similar phenomena happened during the dotcom bubble of the late 90s and early 2000s. But the IPO wave building right now is something different. To understand why, and what it means for your portfolio, you need to understand how dramatically the public markets have shrunk, and what’s about to refill them.
WHERE DID ALL THE PUBLIC COMPANIES GO?
At its peak in 1996, the US stock market listed more than 8,000 domestically incorporated companies. Today, that number sits at roughly 3,400 to 4,000, a decline of nearly 50 percent. As one analyst put it, imagine a grocery store where half the shelves have gone bare. The total value of the market has grown enormously, but the number of choices available to ordinary investors has collapsed.
How did this happen? The answer has several parts. Sarbanes-Oxley and other post-Enron regulations made the cost of being a public company considerably higher. The explosion of venture capital and private equity gave companies the ability to raise billions without ever opening themselves to public scrutiny. And in a development that deserves more attention than it gets, the largest technology companies used their dominant positions to vacuum up potential competitors before they could grow large enough to challenge them.
THE ACQUISITION MACHINE
The five largest technology platforms, Google, Amazon, Facebook (now Meta), Apple, and Microsoft, completed a combined 855 acquisitions from their founding through August 2020. That number continues to skyrocket. Many of these were small enough to fly under the radar of antitrust review, but their cumulative effect on competition was profound.
The classic examples are Facebook’s acquisition of Instagram in 2012 for $1 billion, widely mocked at the time as extravagant for an app with no revenue, and its acquisition of WhatsApp in 2014 for $19 billion. The FTC eventually brought suit arguing these were “killer acquisitions” designed to neutralize rising threats rather than reward innovation. The case was ultimately dismissed in November 2025, with the court finding the FTC failed to prove a sufficiently narrow market, but the strategic logic Zuckerberg’s emails revealed was damning enough: buy the threat, not the technology.
Researchers at Yale found that the percentage of venture-backed startups that were acquired, rather than going public, skyrocketed from roughly 10% to 90% over the past three decades. When a startup was acquired by Google or Facebook, venture investment in the same space dropped by 46% in the following three years and deal count fell by 42%. The acquisitions didn’t just absorb competitors; they killed the ecosystem of competition around them. That vacuum is a big reason public market listings have contracted so dramatically.
The antitrust laws of an earlier era, the era that broke up AT&T and scrutinized horizontal mergers aggressively, very likely would have blocked deals like Instagram and WhatsApp. The market might look quite different today had this been the case.
1999 VS NOW: A TALE OF TWO IPO WAVES
In 1999 and 2000, the US market saw an explosion of IPOs. At the peak, over 300 companies per year were going public, many with no revenue, no path to profitability, and business models that amounted to “put a .com after it and see what happens.” The Nasdaq P/E ratio hit 200 at the bubble’s height. Pets.com went public in February 2000 and was bankrupt by November. The average tech company had been private for four years before its IPO.
The current IPO pipeline looks nothing like that. By 2019, the average technology company was staying private for eleven years before going public. The drought of the 2022-2023 period, when the US market saw fewer than 100 traditional IPOs in each year (down from a post-2000 average that rarely cracked 200), reflects not a lack of great companies but a deliberate choice to wait. The companies preparing to go public now have had years of private-market seasoning. They have real revenue, real customers, and in many cases real profits.
This year’s IPO volume reached 216 deals in 2025, raising $47.4 billion, well above recent years, though still far below the dot-com peaks. The difference is quality. The P/E ratio of the Nasdaq-100 today sits around 30, compared to 200 at the dot-com peak. Today’s leading technology companies are generating the highest dollar profits in corporate history.
THE MEGA-IPOS THAT COULD CHANGE EVERYTHING
Three names dominate every conversation about the current IPO environment: SpaceX, Anthropic and OpenAI.
SpaceX filed its S-1 recently, confirming a June 12 Nasdaq debut under the ticker SPCX. The company reported $18.7 billion in 2025 consolidated revenue, up 33% from the prior year, following its all-stock acquisition of Elon Musk’s AI company xAI in February 2026. The reported target valuation range is $1.75 trillion to above $2 trillion, which would make it one of the ten most valuable publicly traded companies in the world immediately upon listing, behind Nvidia, Alphabet, Apple, Microsoft, and Amazon, but ahead of Meta. If it achieves its reported $75 billion fundraise, it would shatter Saudi Aramco’s $26 billion 2019 record as the largest IPO in history.
OpenAI, whose most recent funding round closed at an $852 billion post-money valuation with participation from Amazon, Nvidia, SoftBank, and others, is generating roughly $25 billion in annualized revenue. CFO Sarah Friar has indicated a late 2026 or 2027 listing window, potentially at a valuation of $1 trillion or more.
Anthropic, the maker of Claude, is also eyeing its public debut, reportedly at a nearly $1 trillion valuation in its latest pre-IPO funding round.
Combined, the potential demand from the five largest anticipated listings alone would exceed the entire 2025 US IPO market.
INDEX INCLUSION: THE FORCED BUYER PROBLEM
Here is where things get structurally fascinating. More than $30 trillion in assets are benchmarked to the S&P 500, Dow Jones, Nasdaq Composite, and FTSE Russell indexes combined. When a company enters one of these indexes, the funds and ETFs tracking that index are required to buy the stock at whatever price it’s trading.
S&P Dow Jones Indices is currently consulting on rule changes that would allow newly public megacap companies to join the S&P 500 after just six months rather than the current 12-month minimum, and potentially waive the profitability requirement for companies that qualify as true megacaps. Nasdaq has already moved, implementing a “fast entry” rule as of May 1, 2026: companies with market caps ranking within the top 40 of the Nasdaq-100 will be eligible for inclusion within 15 trading days of their IPO.
The practical implication is significant. If SpaceX lists at a $1.75 trillion valuation and achieves fast-track Nasdaq-100 inclusion, every passive fund benchmarked to that index becomes a forced buyer at IPO prices. The buying pressure from index inclusion for a company of that size could be historic. For retail investors who don’t actively choose to own SpaceX but hold index funds, the stock may end up in their portfolios regardless.
This is a feature of the current market worth watching carefully. Index inclusion has always created buying pressure. For a company entering near the top of the index by market cap, that pressure would be extraordinary.
IS A STRONG IPO MARKET A WARNING SIGN?
Historically, frenzied IPO activity near market tops has been more signal than coincidence. 1999 saw a flood of questionable companies rushing to monetize the moment. 2021’s record 1,035 IPOs, powered heavily by SPACs, coincided almost exactly with the peak before a brutal 2022 correction. The pattern makes intuitive sense: when valuations are high, it’s a good time to sell shares to the public.
The 2021 episode was a speculative mania in the classic sense. Many SPAC acquisition targets were not “IPO-ready” companies but late-stage startups that had yet to achieve profitability. Most SPAC investors lost substantial capital. The end came quickly when the Fed began tightening in 2022 and the excess liquidity that had fueled the frenzy evaporated.
The current wave is materially different in character. These are companies, SpaceX, OpenAI, Anthropic, Databricks, that have remained private far longer than their predecessors, built genuine revenue, and earned their valuations through actual business performance. The average private holding period before IPO has stretched from four years in 1999 to eleven years by 2019. What’s coming to market now represents the accumulated backlog of an entire generation of private market value creation.
That said, the historical pattern deserves respect. We have not seen the kind of speculative frenzy that typically marks a major market top, and no Pets.com equivalents are queuing up alongside SpaceX. But if the IPO pipeline opens fully and the market absorbs a wave of trillion-dollar listings while valuations remain elevated, that moment of peak supply meeting peak enthusiasm is worth watching. Historically, bull markets don’t typically top before a robust IPO wave plays out. We may be in the early innings of that process rather than the late ones.
MORE LIQUIDITY, MORE SUPPLY: WHAT HAPPENS NEXT?
A revitalized IPO market has broader implications for the overall equity ecosystem:
More investment choices. For the first time in a generation, retail investors may be able to buy into companies like SpaceX and OpenAI directly, not through private funds accessible only to accredited investors. This democratization of access to high-growth companies is genuinely positive for household wealth building.
Price discovery resets. Private valuations have long been set in negotiated funding rounds rather than continuous market pricing. When these companies go public, the market will price them in real time. Some will be validated; others may find the public market less generous than their last venture round.
Index rebalancing pressure. Passive investing now represents the majority of assets in US equity markets. The forced buying that accompanies index inclusion for mega-cap IPOs will create significant demand-driven price pressure at listing. This is a mechanical effect that has little to do with intrinsic value.
Capital recycling. The venture capitalists and early employees who have held illiquid stakes for ten-plus years will, for the first time, be able to exit. This liquidity event will recycle capital back into new startups, potentially re-seeding a venture ecosystem that has been constrained by the exit drought.
THE AI BUILD-OUT: WHY THIS DOESN’T LOOK LIKE 1999
The most common concern raised about the current technology market is that it resembles the dot-com bubble. It is worth examining this seriously, and then noting where the analogy breaks down.
The similarities are real: concentrated market leadership, elevated valuations, massive infrastructure spending, and widespread conviction that a transformational technology is changing everything. The Nasdaq-100’s P/E today is around 30, and there are legitimate questions about whether AI revenue growth will ultimately justify the capital being deployed.
But the differences are more important than the similarities. In 1999, the largest gainers were companies promising future profits. Today, the leading technology companies are generating the highest dollar profits in corporate history, in absolute terms, not just relative ones. Nvidia trades at roughly 35 times earnings and 18 times forward earnings while generating $60 billion in free cash flow. At the dot-com peak, Cisco traded at 132 times earnings with $5 billion in free cash flow.
More fundamentally, the AI infrastructure buildout is backed by real, constrained demand. Microsoft, Google, Meta, and Amazon will collectively spend an estimated $320 billion on capital expenditures in 2026, the majority AI-related. Unlike the fiber optic overbuild of the late 1990s, which laid far more capacity than the internet of that era could fill, the current bottlenecks are genuine: GPU supply, high-bandwidth memory, and data center power capacity. Semiconductor manufacturers like Samsung, SK Hynix, and Micron are being cautious about expanding capacity precisely because they’ve seen what overcapacity does to pricing. Supply is constrained, not surplus.
By 2025, 71% of organizations were regularly using generative AI in at least one business function. Enterprise AI spending reached $37 billion in 2025, up from $11.5 billion the prior year, a more than threefold increase. OpenAI alone reports 800 million weekly active users and 1 million business customers. The internet in 1999 had real potential too, but the infrastructure being built in 2026 has paying customers waiting for it.
The macro backdrop is also different. The dot-com bubble burst in part because the Fed tightened aggressively, with rates rising from 4.75% to 6.5% as inflation ran hot and unemployment hit 4%. Today the monetary backdrop is loosening, not tightening, which historically supports asset valuations.
THE BOTTOM LINE
The IPO market is waking up, and the companies entering it are the real thing. SpaceX and OpenAI are not Pets.com. They represent a generation’s worth of private market value creation finally becoming accessible to public investors.
At the same time, historically, markets have rarely topped before a robust IPO wave plays out. We appear to be in the early stages of that wave, not the late stages. That is both an opportunity and, eventually, something to watch.
The democratization of access to companies that have been private for a decade is genuinely good for investors. The index inclusion dynamics create a structural demand backdrop that can support prices. And the AI infrastructure buildout underpinning much of this activity is backed by constrained supply and genuine, growing demand, not the vaporware of 1999.
The skeptic in us notes that the acronym still applies to individual offerings: do your homework, understand the lock-up period, and remember that index inclusion buying pressure is mechanical, not analytical. But the broader message is that the public markets may be about to become really interesting again, for the first time in a long time.
This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.
