Fundstrat Global Advisors' Tom Lee says the coming wave of giant initial public offerings from companies like SpaceX, Anthropic, and OpenAI — collectively valued in the trillions — won't crash the S&P 500. His reasoning: investors are currently underallocated to equities, and that pent-up demand can soak up the new supply without tanking the market.
Why the supply glut isn't a threat
IPO supply at that scale would normally spook markets. More shares hitting the float usually means downward pressure on prices. But Lee argues the typical math doesn't apply here. Institutional investors, pension funds, and asset managers have been sitting on cash or heavy in bonds, waiting for big-name tech listings. Once SpaceX, Anthropic, or OpenAI actually go public, those buyers will step in. "The underallocation is massive," Lee told clients in a note this week. "Trillions in demand are already parked on the sidelines."
Who's underallocated and why it matters
The underallocated investors Lee refers to are mainly large institutional portfolios that have been underweight U.S. equities for months. Many shifted to fixed income after the Federal Reserve's rate hikes, or they stayed cautious during the 2022 downturn. Now, with inflation cooling and the Fed expected to cut rates later this year, those same funds are hungry for growth. A blockbuster IPO pipeline — led by SpaceX, Anthropic, and OpenAI — gives them a chance to buy into high-growth names without chasing already-priced stocks in the S&P 500.
The companies in the spotlight
SpaceX, Elon Musk's rocket and satellite company, has been circling a public listing for years. Anthropic and OpenAI, two of the hottest names in artificial intelligence, are both reportedly preparing IPOs that could each be worth tens or hundreds of billions. Combined, the trio could represent more than $1 trillion in new market capitalization — a figure that would normally rattle the index. But Lee says the real number is even larger when you factor in the ripple effects: secondary offerings, spin-offs, and other private companies rushing to list before the window closes.
What happens next
For now, the IPO calendar remains uncertain. SpaceX hasn't filed formally, and neither Anthropic nor OpenAI have set dates. The market's reaction to the first big listing will be telling. If the debut pops and the index holds steady, Lee's thesis gains credibility. If the stock stumbles and the S&P 500 slides, the underallocation argument may need rethinking. Investors will be watching for the first filing — likely from one of the AI companies — as the real test.
