Technology firms prepare for blast-off with mega IPOs

By James Purcell, Head of Client Solutions

• At least three firms planning initial public offerings (IPOs) in 2026 could achieve valuations above $750 billion, potentially placing them among the 25 most valuable publicly traded companies in the US.
• Although IPO issuance is expected to be strong, US companies are likely to be net buyers - not sellers - of equities in 2026. Other sources of new equity supply, such as rights issues, are expected to remain muted, while buybacks could withdraw around 2% of total US market capitalisation.
• Large IPO issuance is not a reliable indicator of equity market exuberance or a ‘market top’. S&P 500 returns have been negative in the year following large IPOs only about 20% of the time. 

The US stock market may soon see several high-profile IPOs as large tech companies prepare to go public. Many operate in artificial intelligence (AI) – a capital-intensive sub-sector set to spend over $600 billion on infrastructure in 2026. Going public helps fund this spending.

In recent years, relatively few sizable companies have listed on US exchanges. Using the number of IPOs of more than $25 million as our barometer, the quietest years since the Global Financial Crisis have been the most recent: 2022, 2023, 2024, and 2025.

However, 2026 is set to see a reversal of this trend. Notably, at least three firms planning 2026 IPOs could achieve valuations above $750 billion, potentially placing them among the 25 most valuable publicly traded companies in the US.

In total, companies valued at more than $4 trillion could launch IPOs in 2026 – equivalent to about 6% of the current market capitalisation of the US S&P 500 index. It is worth noting that typically only a fraction of shares (the ‘free float’) are available to new investors upon listing, far below a company’s total value. Even so, Goldman Sachs estimates that IPO proceeds could exceed $225 billion in 2026, marking the highest annual total ever in dollar terms and almost double the 2021 peak of $115 billion.

The value of investments, and the income from them, can fall as well as rise and you may not get back what you put in. Past performance should not be taken as a guide to future performance. You should continue to hold cash for your short-term needs. This article should not be taken as advice.

Contextualising the quantum of new issuance

Despite these record nominal figures, rising share prices mean 2026’s IPO issuance is smaller relative to the overall US stock market than in some past years, such as 1995-1999. Furthermore, IPOs are only one source of new equity issuance. Most new equity is issued by existing public companies via follow-on offerings, convertible debt, and rights issues – IPOs generally account for only a third of new issuance.

Goldman Sachs estimates that total gross equity issuance in the US for 2026 could reach $675 billion – three times the projected IPO proceeds. When viewed as a proportion of market capitalisation, this makes 2026’s equity issuance appear less substantial, ranking only as the 23rd largest over the past 30 years.

What role could passive funds play?

A key trend this millennium has been the growth of passive investing, where funds track indices without making active stock selections. According to the US Federal Reserve, passive funds owned about 5% of US public equities in 2010, rising to around 15% today.

This growth matters because index rules determine whether passive funds will automatically buy shares in newly listed companies. Several index providers – including FTSE Russell, Morningstar, and Nasdaq – have recently revised their methodologies to allow faster inclusion of IPO firms, permitting entry within the first 15 days of post-IPO trading. However, S&P – the largest index provider for US passive funds – has maintained stricter criteria. To enter the S&P 500, a company must be publicly listed for at least 12 months, have a minimum free float of 10%, and record at least four consecutive quarters of positive net income before being added to its indices.

This, coupled with the fact that most indices determine stock weights based on free float rather than market capitalisation, means passive US investment flows are unlikely to provide meaningful immediate demand for new IPOs. Moreover, investors in S&P 500-linked passive products will not quickly gain exposure to these newly listed technology companies.

What could the impact be on investment performance?

BCA Research analysed thousands of IPOs over the past 40 years and found that most delivered negative returns during their first three years of public trading. However, an investor who bought into all IPOs over this period would have achieved strong overall returns. This is because a small number of IPOs generated very strong returns, outweighing weaker performers.

For multi-asset investors, the more relevant question is whether IPOs affect overall market performance. Financial markets match buyers and sellers, so additional equity supply from IPOs could theoretically disrupt this balance, putting pressure on share prices. However, companies also withdraw shares through ‘buybacks’, which currently remove around 2% of US equity market capitalisation annually. Since the Global Financial Crisis, buybacks have outweighed gross equity issuance every year. This trend is expected to continue in 2026; companies should buy more shares than they sell, this could support stock prices.

Do large scale IPOs indicate a change in equity market fortunes?

Large IPO issuance is not a reliable indicator of equity market exuberance or a ‘market top’.

According to BCA Research, following very large IPOs, the S&P 500 has averaged positive returns of around 6% over the subsequent 12 months – below its long-term average of approximately 10%. Additionally, around 20% of the time, S&P 500 returns have been negative in the year after these large IPOs.

This suggests that while large IPOs are not a clear signal of market downturns, they can precede a period of more muted equity returns.

Our investment positioning

Our investment approach focuses on economic growth, inflation, and policy, which together influence corporate earnings growth. Based on our analysis, we are overweight equities relative to G7 government bonds, with a preference for emerging markets. Similar to US equities, emerging market shares have significant exposure to the secular AI theme but offer this exposure at lower valuations and without the pending equity supply expected in the US.

The above article has been written and published by Coutts Crown Dependencies investment provider, Coutts.