Markets are walking a tightrope between blockbuster flotations and the risk posed by geopolitical uncertainty, according to one investment expert.
SpaceX kicks off its investor roadshow today – setting out its stall for what could be a record-breaking initial public offering.
Ahead of that it took the unusual step of setting a firm offer price of $135 per share. If it achieves that, it will raise $75 billion, and secure a valuation of $1.75 trillion.
This massive IPO is set to be followed swiftly by another – with AI leader Anthropic recently filing paperwork to begin its own sales process.
With a recent funding round putting its valuation of $965 billion, it’ flotation value is likely to push beyond the $1 trillion mark too.
“Only 12 weeks ago, Anthropic was valued at $350 billion, so we’re talking about a tripling of value in three months,” said Anna MacDonald, investment strategy director at Hargreaves Lansdown. “It’s just astonishing.
“But they are growing really fast. They’ve now got five times the revenue they did last year, and they really are targeting with great success that enterprise segment.”
And it is widely expected that the market will see at least one more $1 trillion IPO before the year is out – with OpenAI likely to begin its own flotation process in the coming months.
“They have a few more challenges, I would say, because they’ve got more competition in the consumer side, which is where they’re really targeting,” she said.
“They’re getting quite a lot of competition now from Google, who’ve got their own Gemini large language model, which you might have noticed when you try and Google something,” she explained.
While stock markets have seen busy periods of flotation before, having three massive listings like these is unprecedented.
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That is in part due to the fact that all three companies have had little problem in raising funds privately – meaning they could stay out of public markets for longer than they might otherwise have done.
But it also means they have a cohort of early investors who are now looking to make a return.
“Normally, when you’d have a share come to market, it would be at the early stage of its growth, and there’s already been quite a lot of growth in these companies,” said Ms MacDonald. “Investors are going to be maybe trying to take some profits who have been private investors until then.”
These blockbuster IPOs reflects the huge level of confidence there is in the AI market at the moment – with many firms planning to spend tens, if not hundreds of billions of dollars in the area this year alone.
That focus is already drawing attention away from other parts of the market – which is a trend that Ms MacDonald says could accellerate in the near future.
However it is also coming at a time when there are growing concerns around the health of the global economy.
Yesterday the OECD predicted slower global growth this year than in 2025, while it warned that a prolonged conflict in Iran would weaken activity further – while also pushing inflation higher.
That presents a challenging market for any company to grow in. However the prospect of rising energy costs and companies looking to cut costs will make it even harder for AI firms to move from its current hype cycle into profitability.
“I feel like we’re sort of walking a bit of a tightrope here,” Ms MacDonald said. “Because, you know, you’ve got investors on one hand not wanting to miss this boom in artificial intelligence, but the OECD reminding us that we’ve got a lot of issues here,” she said.
“A speedy resolution in the Middle East is still going to be very important for the global economy, beyond AI,” she added.
