Bank of America strategist Michael Hartnett warned on May 22 that upcoming mega-IPOs from Elon Musk’s SpaceX and OpenAI could push technology sector weightings in equity markets beyond historic bubble peaks [1]. SpaceX plans the world’s largest IPO, while OpenAI aims to go public quickly to beat rival Anthropic to the market [1, 2].
Technology stocks already make up over 44% of the S&P 500 index, according to Hartnett, approaching the 48% peak levels seen during major market bubbles in history, such as the 1920s crash, the 1970s Nifty Fifty, Japan’s 1980s asset bubble, and the 1990s tech, media and telecom bubble [2]. The mega-IPOs could exacerbate market concentration, significantly raising bubble risk [1, 2].
Fund managers have increased stock allocations to record highs as of May, signaling rising optimism in US markets ahead of these public offerings [2]. At the same time, rising bond yields remain a key signal that could mark the end of the bubble phase [2]. Hartnett points to two State Street ETFs tracking biotech and retail sectors as useful barometers to watch for the bond yield impact on equities [2].
While some large IPOs in the past, like Saudi Aramco and Meta, had limited market impact, IPOs near peak valuations have sometimes preceded market downturns [2]. Hartnett said major stock sell-offs are unlikely before the AI and aerospace IPOs finalize, though broader monetary tightening may only come if the consumer price index rises to 4-5% in the coming months [2].
With SpaceX and OpenAI aiming for massive public listings soon, investors and analysts will closely monitor market concentration levels and bond yields as key indicators of potential bubble pressures ahead.
