Blog: Will Mega-IPOs Create AI Warp Speed or a Black Hole?

While yet another peace treaty is promised to be near, the market is also waiting for two mega IPOs from SpaceX and OpenAI. The target value for each company is $2 trillion and $1 trillion respectfully. To get some perspective one trillion is a million millions. I haven't included IPOs in my bubble checklist because IPOs are very specific to the stock market. But it is also true that most stock market bubbles are characterized by large IPOs of companies which have no current profits. It's the promise of future profits that people buy. Speculation is wide-spread that the current market/bubble story will come true quickly enough to justify the high price of getting in on the ground floor. What better way to define a mania.

But this isn't the ground floor. Information Technology and Communication services are now 43% of the S&P 500, up from 33% at the end of 2019 and 20% in 2007. These two IPOs will likely increase that weight to over 48%. Basically the index widely used as a diversified equity benchmark will have almost half of its weight in one industrial sector.