A wave of big technology companies plan to list publicly this year, worrying investors about billions of dollars in new shares hitting the stock market.
The chief concern is that the rout gripping tech stocks in June could deepen as investors are forced to sell what they own to make room for the newcomers.
U.S. stocks finished sharply lower on Wednesday as the tech rout picked up steam just days ahead of SpaceX's initial public offering. The Nasdaq Composite and the S&P 500 have each fallen for two consecutive trading days and were off 2.9% and 1.9%, respectively, over the two-day period. The Dow Jones Industrial Average has slid for three of the past four trading days and on Wednesday slumped 1.9%, its worst day of 2026, according to FactSet data.
Yet there are signs those fears may be misplaced. "Clearly, we were overbought coming into this month, and there has been some profit-taking in semiconductors and tech stocks as that whole complex is coming unwound," said Adam Turnquist, chief technical strategist at LPL Financial on Wednesday. "But this really just comes with the territory after these big moves."
Some recent weakness in stocks might be coming from investors making room for Friday's SpaceX IPO, as well as other potential new-issue supply from artificial-intelligence heavy hitters looking to raise money via the stock market in 2026.
"But the market can absorb that - like no problem," Turnquist said, adding that there's roughly $8 trillion currently parked in U.S. money-market funds. "There's a lot of cash on the sidelines."
A look at past IPO booms also suggests a new glut of supply doesn't necessarily jeopardize the market, as stocks typically have seen strong returns when the IPO gates have swung open, according to Deutsche Bank.
"Equity-issuance waves typically coincide with strong equity-market returns, not market stress," wrote Binky Chadha and Parag Thatte, equity strategists at Deutsche Bank, in a client note. "Companies tend to issue when equity demand is strong, earnings momentum is healthy and investor risk appetite is elevated."
In other words, a booming stock market typically encourages private companies to go public and issue shares, rather than new issuance being what drags the market down, Chadha and Thatte said.
The chart below shows the relationship between equity-issuance waves, such as IPOs and follow-on offerings, and the performance of the S&P 500 over the past three decades. The stock market typically performs well leading up to and during periods when companies are issuing new shares, according to data compiled by Deutsche Bank.
SOURCE: BLOOMBERG FINANCE, DEALOGIC, DEUTSCHE BANK ASSET ALLOCATION
"Across several issuance waves over the past three decades, median equity returns [for the S&P 500] were around 8% over three months and more than 20% over 12 months," Chadha and Thatte noted. "The main exception was the forced issuance during the global financial crisis between 2008 and 2009, which occurred amid a systemic selloff."
U.S. equity issuance has been rising steadily since early 2023, climbing to roughly $120 billion from around $30 billion three years ago, Chadha and Thatte said. The coming months should mark a meaningful step-up, with a flurry of high-profile mega-IPOs from SpaceX, OpenAI and Anthropic expected to raise tens of billions of dollars each.
SpaceX aims to raise a record-breaking $75 billion through its IPO on Friday, valuing Elon Musk's rocket company at about $1.8 trillion. OpenAI on Monday confidentially filed paperwork for its IPO and is reportedly targeting to raise more than $60 billion, but the company said it had not determined when it would begin listing on public markets. Anthropic also filed confidentially with the SEC for an IPO last week, but the number of shares to be offered and their price have not yet been decided.
Additionally, Google parent Alphabet $(GOOGL)$ $(GOOG)$, Meta Platforms (META) and others are have investors bracing for more stock issuances - and borrowing through debt markets - to help finance the spending boom to build AI data centers.
Yet even the very largest expected IPOs this year would collectively represent just over 0.1% of the S&P 500's total market capitalization, according to Deutsche Bank.
There's also been significant capital flowing into stock funds. "Inflows are booming, supported by robust earnings growth, still modest overall equity positioning and elevated buyback activity," the Deutsche Bank strategists said.
"Household balance sheets also retain significant capacity to absorb new supply," they added. "As with prior IPO waves, strong demand - not excess supply - is likely to be the defining feature."