Macro Moments Weekly: Mega IPOs, Mega Questions

Key Takeaways

• Record IPO and investment-grade bond issuance reflects strong corporate demand for capital, but 2026’s IPO activity remains modest relative to overall market size, historically supporting solid equity returns.

• Mega AI-related IPOs such as Anthropic are likely to have limited index impact due to relatively small free floats, though elevated valuations will be closely scrutinised by investors.
• The next phase for AI companies is proving they can balance rapid growth with sustainable funding, making cash flow discipline and execution key determinants of long-term success.

Looking across equity and fixed income markets, 2026 is shaping up to be a record year for supply. Issuance of both initial public offerings (IPOs) and investment-grade paper is approaching the records set at the start of this decade.

In 2020, investment-grade net issuance peaked north of US$600 billion, and whilst 2026 probably won’t quite reach that, this year’s net US$500 billion is still the second-largest since 2010. Meanwhile, the equity market is seeing its heaviest IPO year since 2021, when about US$160 billion was issued. Interestingly, net flow into investment-grade funds has also been running at record levels in 2026, although the same cannot be said for equities.

With both sides of the corporate balance sheet searching for cash, it’s no wonder investment banks have had a bumper year, even after the warnings about the slowdown in bond issuance in the fourth quarter. Spreads widen if they overdo it as investors shy away, but the same mechanism is less obvious in IPOs, especially the mega IPOs. Certainly, we will finish the year with Anthropic publicly listed. So, what does a heavy IPO year mean for equities?

On the surface, heavy IPO years have historically led to down markets. Since 1995, the seven heaviest years by value have seen negative returns on the S&P 500 Index over the next 12 months and a gain of just 3% over the 12–24-month period. These heavy years had an uncanny knack of arriving just before major downturns, such as 2000 and 2007, which significantly lowered the numbers.

But when we look at IPO issuance as a proportion of market capitalisation, the story changes significantly. The heavy years now include 2000 and 2007 but also mid-cycle successes of 1995, 1996, 2012 and 2014, giving an average return of 3% over 12 months and 9% between 12 and 24 months.

But 2026 is not in that top quartile. It is not even close. As a proportion of market capitalisation, it falls into the second quintile, even if Anthropic does come in. Historically, this quintile has delivered an average return of 19% over the following year and another 9% over the subsequent 12 months.

But what is striking is the performance of IPOs when we look at the free float and their valuation. Stocks with a limited free float performed best over a three-year period, while stocks sold at over 40x price-to-sales performed worse. Why does this matter? With the mega IPOs, we are expecting they will have limited free floats and thus limited impact on market indices. But they will have high price-to-sales ratings: SpaceX came in at 94x. Anthropic’s funding rounds were conducted at much lower valuations; the latest in February 2026 was around 27x price-to-sales. We have yet to get an indication of what the IPO valuation will be.

Here’s why this matters. The AI buildout has now overtaken the shale-oil boom of 2010 to 2014, but the financing model looks very different. So far, AI investment has largely been funded through cash flow and equity rather than debt. OpenAI, for example, has no debt but still needs significant injections of equity to fund growth, improve its models and compete. In short, OpenAI still needs cash.

The great debate is whether AI companies could eventually resemble the railways of 150 years ago, collapsing under debt that limited cash flows could not service. So far, the financing model suggests otherwise.

Over the next few quarters, both the growth thesis and the funding model are likely to come under much greater scrutiny. So far, the sector has consistently beaten expectations, allowing companies to spend more to accelerate growth. Balancing funding and cash flow during the period of explosive agentic growth whilst avoiding a token price war will be crucial. On that basis, Anthropic appears well placed to attract investor demand.