🚨 THIS IS HOW AI BUBBLE WILL CRASH S&P 500
Read the post carefully before buying stocks
3 AI and space giants are going public in the same year with a combined valuation approaching $4 trillion:
1. The biggest IPO wave in decades
- SpaceX could become the largest IPO in history, raising up to $75 billion(
$SPCX will debut on Nasdaq on June 12)
- OpenAI has already filed a confidential S-1 and is targeting a valuation above $1 trillion
- Anthropic is also considering a public listing at a valuation of around $1 trillion
2. The S&P 500 is currently being carried mostly by the Mag 7 and AI-related stocks (Nvidia, Microsoft, Google, Amazon, etc.), which make up roughly 33-35% of the index
These 3 IPO could create a massive liquidity drain as investors move $75-200 billion into SpaceX, OpenAI, and Anthropic shares
Funds and investors would likely sell existing positions in today's market leaders to free up capital, with Nvidia, Microsoft, and Google among the first likely to feel the pressure
On top of that, the S&P 500 has so far resisted fast-tracking these unprofitable giants into the index, meaning the capital rotation effect could put even more pressure on existing index components
3. History shows a concerning pattern
At the peak of every major market bubble, capital became concentrated in a small group of "can't lose" companies:
- The Roaring Twenties
- The Nifty Fifty era
- Japan's 1980s asset bubble
- The Dot-Com Bubble of 1999-2000
Today, capital concentration in the tech sector is once again near historical extremes
4. After an IPO, early investors get the opportunity to lock in profits
Historically, lock-up expirations have often increased selling pressure on newly public stocks
During the Dot-Com era, even some of the highest-quality companies suffered massive drawdowns:
- Amazon: -95%
- Microsoft: -65%
- Intel: -80%
- Oracle: -80%
- Yahoo: -97%
A great business doesn't protect investors from overvaluation
IPOs at these kinds of valuations, while many AI companies are still deeply unprofitable, are often a sign of market euphoria
I've said this before, and the cycle is still playing out exactly according to plan
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The next phase is gonna be very important