In this week’s episode of Power and Consequences, we (Gary Gensler and Simon Johnson) discuss the significance of the current wave of very large initial public offerings: SpaceX recently; and potentially upcoming from Anthropic and OpenAI.
These companies have already raised large amounts of capital through private offerings and are now turning to public markets. If their recent private market valuations and the experience of SpaceX are any guide, their public market capitalizations (value of shares outstanding) will be among the largest in the world.
In part, this ability to issue capital reflects well on the functioning of US capital markets. The US share of global equity outstanding (over 50%) is well in excess of our share of global GDP (less than 25%).
But is there something else going on? History tells us that enthusiastic investment cycles and financial markets’ FOMO for general purpose tech generally leads to over-investment followed by market and economic reckonings.
US market and economic growth have been highly dependent on the outsized funding of AI infrastructure investment. Might this be what we’re currently experiencing in the US? Are the Mega IPOs a potential ‘tell’ of what comes next?
For investors (in public and private markets) to be rewarded, the large AI hyper-scalers and model companies will need to successfully find revenues to justify their significant current capital expenditures. To do so, AI needs to lead to sufficient US productivity boost to overcome creative disruption of many sectors’ and valuations.
Amidst the boom of AI investments, have US equity market prices become stretched? Is there excessive exuberance about potential revenues and profits in the AI sector? Is the AI investment boom being financed by an appropriate mix of equity and debt? What could go wrong?
There is a lot to read on this fast-changing topic. Here are few items worth digging into more deeply, depending on your particular interests:
Bloomberg’s Shuli Ren on “Why SpaceX, Samsung, Hynix are Becoming Meme Stocks”, all currently trillion dollar market cap companies.
‘SpaceX and OpenAI Are Ending Wall Street’s Era of Stock Scarcity’, Bloomberg, June 14, 2026
‘Is the US Stock Market Too Big?’, Jim O’Neil, Project Syndicate, June 10, 2026
‘Some Indexes Accelerate Entry for Massive IPOs’, Charles Schwab, June 10, 2026
A piece from Adviser Perspectives on the increasing use of margin debt by investors.
For a deeper look at WorldCom, the Internet era’s largest financing and subsequent bankruptcy, read a 2002 Wall Street Journal interview: ‘Gensler Says Telecom Stocks Still Have Tough Times Ahead’. It’s actually about Gary’s identical twin brother, Robert Gensler, then a star telecom portfolio manager at T. Rowe Price.
