US stock market to end two decades of shrinking
The voracious appetite by companies to buy back their shares this millennium has overwhelmed any equity issuance by them.
However, the resulting two-decade drought in US stock supply could end soon. A trio of blockbuster IPOs from SpaceX, Anthropic and OpenAI is set to flood the market, threatening to test the absolute limits of investor demand.
This wave comes just as Wall Street’s tech titans launch multibillion-dollar share sales to bankroll their massive AI build-outs. It marks a dramatic U-turn from the era of heavy share repurchases that helped US stocks more than triple since 2016.
Goldman Sachs estimates net supply of equity in the US — measured by new shares hitting the market less equity removed by buybacks or companies going private — will be almost flat in 2026, having been in negative territory since 2003. The bank expects an even greater influx of new shares in 2027, as lock-up periods on this year’s IPOs expire, write Kate Duguid and Emily Herbert.
Without the tailwind of a shrinking supply of shares, some analysts and investors worry Wall Street’s tech-led rally could finally run out of steam.
“This is a sea change,” said Ajay Rajadhyaksha, global chair of research at Barclays, referring to AI spending that is leaving little room for buybacks and turning some of the biggest companies in the US into net equity issuers.
Sixty US companies have gone public this year, raising nearly $40bn, the highest year-to-date deal value since 2021, according to data from Dealogic that excludes listings of blank-cheque companies. Goldman expects that figure to rise to a record $225bn this year following the raft of big listings.
Some fund managers warn that a flurry of fundraising has in the past often accompanied the top of the market, as company insiders rush to sell their shares at elevated valuations and markets buckle under the weight of new shares.
“Record new issues is one of the classic signs of a bubble,” said Richard Bernstein, global head of macro investing at Janus Henderson Investors. “The new big three IPOs will dwarf the entire amount raised during the [1999-2000] tech bubble even when accounting for inflation.”