AI behemoths are lining up for IPOs—will this be the 'last hurrah' for US equities?

By Dong Jing

Source: Wall Street News

An IPO bonanza reminiscent of the peak of the dot-com bubble is taking shape. AI titans OpenAI, Anthropic, and SpaceX are racing toward public listings, each targeting valuations in the trillions of dollars—an aggregate scale large enough to reshape the US equity landscape. This unprecedented wave of IPOs serves as the ultimate stress test for AI investment theses and will be the biggest variable driving risk assets this year.

On May 22, according to an article by Wall Street CN, OpenAI has prepared to confidentially submit its IPO filing to regulators and could go public as early as September this year, with a target valuation exceeding $1 trillion and plans to raise approximately $60 billion—more than double Saudi Aramco’s record-setting $25.6 billion IPO in 2019.

Meanwhile, rival Anthropic is also advancing its own listing plans and disclosed that it expects second-quarter revenue to double sequentially to $10.9 billion, potentially achieving its first quarterly operating profit. Deutsche Bank noted in a research report that the execution of these two IPOs 'could very well become a major swing factor for risk assets this year' and represents a macro theme that must be closely watched.

Beneath their glossy valuations, however, the two companies’ financial fundamentals diverge sharply. OpenAI reported $5.7 billion in revenue for the first quarter but posted an adjusted operating margin of -122%, meaning it loses $1.22 for every dollar of revenue generated, and is not expected to achieve positive cash flow until 2029–2030 at the earliest. Anthropic, by contrast, reported $4.8 billion in revenue for the same period and expects second-quarter revenue to jump to $10.9 billion, with an estimated operating profit of approximately $559 million—already reaching the threshold of profitability.

Analysts note that the two companies, though competing head-to-head, embody starkly different business models, presenting public market investors with a rare dilemma.

In a research report, Deutsche Bank stated that whether it’s OpenAI or Anthropic, either company’s IPO would raise more than twice the amount of Saudi Aramco’s 2019 offering—even after adjusting for inflation, it would easily become the largest IPO in history.

In another research note, Deutsche Bank said that if OpenAI achieves its target valuation of over $1 trillion, it would rank as the world’s 14th-largest company by market capitalization—just behind Berkshire Hathaway and ahead of Eli Lilly and Co.

By comparison, Berkshire reported revenue exceeding $370 billion and net profit of $67 billion last year; Eli Lilly recorded sales of over $65 billion and profits of $21 billion. OpenAI, meanwhile, is not yet profitable, with annualized revenue of roughly $30 billion and only a few thousand employees.

From a market capacity perspective, Deutsche Bank noted that the current total U.S. equity market capitalization of approximately $70 trillion is five times that at the peak of the dot-com bubble, indicating far stronger absorption capacity than in the late 1990s.

Back then, nearly 500 companies went public annually on average, compared to only about 120 per year so far this decade—and today’s listed companies are generally more mature.

Moreover, a single IPO of $60 billion would be slightly below the total U.S. IPO proceeds for all of 1999 and 2000 (each around $65 billion) and equivalent to half of the record-breaking $119 billion raised in 2021.

As these behemoths move toward public listings, their potential drain on U.S. equity market liquidity has already put Wall Street on high alert.

The cluster of IPOs from SpaceX, OpenAI, and Anthropic—combined with Nasdaq’s newly introduced 'fast-track index inclusion' mechanism—is setting the stage for an unprecedented reallocation of passive capital, driven by the AI giants’ gravitational pull.

According to an article cited by Wall Street News, JPMorgan estimates that if SpaceX achieves a target valuation of $2 trillion and ultimately has 50% of its shares floated, passive funds would be forced to sell approximately $95 billion worth of existing holdings in the eight major Wall Street tech stocks—NVIDIA, Apple, Microsoft, Amazon, Google, Broadcom, Meta, and Tesla—to free up capital for new allocations.

Todd Sohn, Chief ETF Strategist at Strategas, noted that since IPOs typically float only about 5% of shares initially, while ETFs track trillions of dollars in assets, this extreme supply-demand imbalance will make the index inclusion process 'somewhat chaotic,' potentially leaving passive investors with no choice but to buy in at elevated prices.

Valérie Noël, Head of Trading at Syz Group, stated that markets have already begun pricing in downward pressure on existing large-cap stocks.

According to information disclosed on March 28 of this year, OpenAI’s public listing will serve as a substantive referendum on the entire AI investment thesis. The data shows that OpenAI generated $13.1 billion in revenue in 2025 but is projected to incur a net loss of $14 billion in 2026.

Meanwhile, OpenAI has committed to investing approximately $1.4 trillion in infrastructure by 2033. If S&P Global, FTSE Russell, and Nasdaq apply fast-inclusion rules, they could force passive funds to purchase between $24 billion and $48 billion of OpenAI shares immediately upon listing.

Faced with such massive portfolio rebalancing, retail investors—whether they like it or not—will see their portfolios passively reshaped as indexing rules evolve.

Deutsche Bank highlighted in its research report that the execution mechanics of these IPOs will be a major swing factor for risk assets this year. PitchBook’s analysis was even more blunt:

The private market is exhibiting a 'systemic quality inversion'—the highest-valued companies score the lowest on business quality metrics that actually determine public market pricing.

For retail investors holding index funds or ETFs, it’s impossible to stay on the sidelines in this game: regardless of intent, their portfolios will be passively reshaped as index rules change.

For active investors, once the S-1 filing is made public and all financial secrets are laid bare, the market will face a clear choice: believe in a company that has already found a profitable business model, or back a giant asking for several more years and tens of billions of dollars to explore its path to profitability?

The answer will determine whether this rally marks the beginning of a new cycle or the final dance before the party ends.

Despite both companies seeing soaring valuations, their financial conditions present starkly contrasting pictures. Anthropic has already turned a profit, challenging the conventional wisdom that massive spending would inevitably weigh down near-term profitability for AI firms.

According to an article by Wall Street Journal cited by Caixin, on Wednesday local time, The Wall Street Journal reported that Anthropic’s second-quarter revenue is expected to more than double to $10.9 billion, generating approximately $559 million in operating profit.

Anthropic’s gross margin has surged from 38% to over 70%. Its CEO, Dario Amodei, even joked that revenue growth had become “too hard to manage.”

The company’s success stems largely from explosive demand from enterprise clients for its programming tools—about 85% of its revenue comes from enterprise and developer customers, a model characterized by strong willingness to pay and relatively low service costs.

In contrast, OpenAI is still losing money.

As noted in a Caixin article, data shows that OpenAI generated $5.7 billion in revenue in the first quarter, but posted an adjusted operating profit margin of -122%, meaning it lost $1.22 for every dollar earned.

Approximately 85% of OpenAI’s revenue is tied to ChatGPT consumer subscriptions. Despite having 55 million paying users, it supports over 900 million weekly active users—a vast pool of free users that creates a massive cost sink in inference expenses.

OpenAI is not expected to achieve positive cash flow until 2029 or 2030, and its CEO Sam Altman and Fidji Simo, CEO of the applications business, are trying to shift focus toward commercial clients who can generate revenue directly.

At the IPO narrative level, the two companies are telling starkly different stories. Anthropic has verified quarterly profitability data and positions itself similarly to Salesforce or ServiceNow—a logical enterprise software company story.

OpenAI, by contrast, must convince the market that AI agents, image generation, and even advertising will eventually convert massive consumer traffic into profits.

In Sam Altman’s plan, ChatGPT’s advertising business could generate roughly $102 billion in revenue by 2030—but this will take time, and time is precisely the scarcest resource OpenAI has as it trades losses for growth.

According to an article by Wall Street News, Joachim Klement, Managing Director at Panmure Liberum, views this wave of AI giant IPOs fundamentally as a 'risk transfer'—a cash-out move that shifts early-stage investment risk en masse onto retail investors, pension funds, and other institutions.

He argues that companies like OpenAI and Anthropic are accelerating their listings amid heightened investor sentiment, aiming to lock in high valuations before the hype fades. Early institutional investors can thus exit cleanly through public markets, while retail investors and pension funds stepping in will bear the brunt when financial realities ultimately catch up.

He explicitly characterizes this process as 'a large-scale transfer of investment risk from current holders to those willing to pay for the story.'

Klement draws a parallel to Alan Greenspan’s 1996 warning about 'irrational exuberance'—which came three years before the bubble burst. He believes AI hype could persist through 2026, with hyperscale cloud providers unlikely to significantly cut investments; however, the 'impossible math' will eventually revert to reality—'perhaps not in 2026, but possibly in 2027 or 2028.'

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