Investors are eagerly eyeing potential opportunities in the tech sector, particularly in high-profile private companies such as OpenAI, Anthropic, and SpaceX, which may go public later this year. However, new research from the asset management firm GMO raises concerns about the implications of a surge in initial public offerings (IPOs) on the broader stock market, particularly in 2026.
GMO, co-founded by the renowned investor Jeremy Grantham, suggests that the influx of shares from these mega IPOs could apply downward pressure on stock prices. The firm’s report indicates that stocks, like other assets, are influenced by the basic principles of supply and demand. A significant increase in share supply without a corresponding rise in demand could lead to a decline in prices.
Ben Inker, co-head of asset allocation at GMO, stated his expectation that 2026 could witness unprecedented IPO excitement, predicting that at least two of the private tech giants mentioned will make their market debuts. He warns that this trend could pose challenges for the U.S. market as investors rush to purchase shares once these companies go public. “Historically, each 1% increase in market cap through IPOs has eventually led to approximately a 7.5% decrease in stock market prices,” Inker noted, indicating that while initial reactions to IPOs may involve price increases, longer-term trends could be detrimental as more shareholders look to monetize their investments.
GMO’s skepticism towards the recent boom in artificial intelligence stocks has been well-documented. Inker elaborated in a December interview that he anticipates negative returns for the S&P 500 in 2026, a prediction that diverges significantly from Wall Street consensus. He emphasized a potential rotation out of the market’s largest AI stocks, viewing brighter investment opportunities in areas such as Japanese small-cap stocks and European value stocks.
The conversation surrounding the tech IPO landscape is particularly pertinent now, as investors weigh the potential risks and rewards. With many eyes focused on highly sought-after companies, the interplay between supply and demand, market sentiment, and broader economic factors could shape investment strategies in the coming years.
