Major AI companies preparing for public listings in 2026 could create significant turbulence in the broader stock market, according to new research from asset management firm GMO. The firm, led by legendary value investor Jeremy Grantham, warns that anticipated IPOs from tech giants like OpenAI, Anthropic, and SpaceX may trigger substantial market pressure despite investor enthusiasm.
Ben Inker, GMO’s co-head of asset allocation, predicts that 2026 will witness unprecedented IPO excitement, with at least two of these private AI giants going public. However, the massive influx of new shares could create a supply-demand imbalance that depresses overall market prices. The concern centers on basic market mechanics: when substantial new supply enters the market without proportional demand increases, prices typically fall.
The research reveals a striking historical pattern: each 1% increase in market capitalization through IPOs eventually leads to approximately a 7.5% decrease in stock market prices. This relationship suggests that the mega-IPOs from AI leaders could have outsized negative impacts on existing equity values.
A particular concern involves the S&P 500 benchmark index. Since these companies won’t initially be part of the index when they list, their IPOs could trigger significant outflows as investors redirect capital from index holdings to purchase shares in the newly public AI companies. This rotation effect could amplify downward pressure on established stocks.
Inker acknowledges that markets might initially rise following these high-profile listings, driven by excitement and FOMO (fear of missing out). However, longer-term challenges emerge as early investors and employees monetize their holdings, creating sustained selling pressure that the market must absorb.
GMO has consistently expressed skepticism about the AI trade over recent years, positioning itself against the prevailing Wall Street consensus. Inker previously told Business Insider in December that the S&P 500 is due for negative returns in 2026, a notably bearish call. The firm recommends investors consider alternative opportunities, including Japanese small-cap stocks and European value stocks, as potential refuges from anticipated U.S. market turbulence driven by AI company listings.
Key Quotes
My prediction is that 2026 is going to see a level of IPO excitement that we haven’t seen in a while. My guess is that at least two of the private giants (OpenAI, Anthropic, SpaceX) will go public, and this is likely to put pressure on the U.S. market later in the year
Ben Inker, GMO’s co-head of asset allocation, made this prediction in a report last month, setting expectations for unprecedented IPO activity among AI leaders while warning of consequent market pressure.
Historically, each 1% increase in market cap through IPOs eventually leads to approximately a 7.5% decrease in stock market price. Post IPOs, initially, maybe the market rises, but longer term as more stockholders are able to monetize, that will create a challenge for the U.S. market
Inker provided this historical analysis to quantify the potential market impact, explaining the mechanism by which early investor monetization creates sustained selling pressure that outweighs initial enthusiasm.
Our Take
GMO’s contrarian stance on AI IPOs deserves serious consideration, even as it runs counter to widespread market optimism. The firm’s historical pattern analysis—7.5% decline per 1% IPO market cap increase—provides empirical grounding for what might otherwise seem like pessimistic speculation. What’s particularly noteworthy is the supply-demand mechanism at play: these aren’t ordinary IPOs but potential mega-listings that could each represent hundreds of billions in market capitalization.
The S&P 500 rotation risk is especially compelling. Passive index investors may face forced selling as active managers chase AI IPO allocations, creating technical selling pressure disconnected from fundamental valuations. However, one should note GMO’s consistent AI skepticism—this isn’t a new position but part of a broader bearish thesis. The real question is whether AI’s transformative potential justifies valuations that can absorb this supply shock, or whether we’re witnessing late-stage bubble dynamics where even good companies create bad market outcomes through oversupply.
Why This Matters
This analysis carries significant implications for the AI investment landscape and broader market dynamics as the industry matures. The potential public listings of OpenAI and Anthropic represent watershed moments for AI commercialization, marking the transition from private venture-backed growth to public market scrutiny. For investors, the GMO warning suggests that AI enthusiasm could paradoxically create market headwinds rather than tailwinds, challenging the narrative that AI companies will lift all boats.
The research highlights a critical tension in AI investing: while these companies represent cutting-edge technology with transformative potential, their sheer size means their market entry could disrupt existing portfolios. This matters for retail and institutional investors alike, who may need to rebalance strategies to account for both the opportunities these IPOs present and the systemic risks they pose to existing holdings. The 7.5% price decrease per 1% market cap increase formula provides a concrete framework for understanding potential downside exposure, making this more than theoretical concern—it’s a quantifiable risk that could reshape 2026 investment strategies across the AI sector and beyond.
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