Daily Spotlight

AI Dominates IPO Market

Hostilities in the Middle East and the Fed's decision to raise rates -- not to mention typical seasonal summer weakness in the IPO industry -- resulted in a quiet new-issue period in 3Q26. Led by SK Hynix, 27 operating companies completed IPOs in 3Q26, down from 48 in 2Q and 33 in 1Q. The group raised nearly $35 billion in capital, down from $105 billion raised in 2Q26 but well ahead of the $15 billion raised in 3Q25. Year to date, 108 companies have gone public, raising $155 billion in capital. On the surface, that compares unfavorably with the 161 companies that issued IPOs during the same period a year ago. But we note that the 2025 line-up raised only $31 billion in capital. The delta here is the advent of AI. In 3Q, South Korean semiconductor company SK Hynix raised $26.5 billion and opened on the Nasdaq market with a market cap above $1 trillion. It was following in the footsteps of SpaceX, which raised $75 billion in its IPO and currently boasts a market cap around $2 trillion. First day IPO performance was a bit weaker than normal in 3Q. Among the 27 IPOs, 13 opened in positive territory compared to pricing, while 11 opened lower, and three were unchanged. The average at-the-open return was 7%, below 15% in 1H26 and the long-term average of 17%. Most of the top performers in 3Q, including the top five, came from biotech. In the quarter, there were four IPOs that raised $1 billion or more, compared with 10 in the prior quarter. We think the IPO market's primary near-term driver remains the AI space. AI leaders Anthropic and OpenAI both confidentially filed S1s in June. Though both have pushed out their respective timelines compared to initial targets, we expect both will go public with valuations exceeding $1 trillion....  On the surface, that compares unfavorably with the 161 companies that issued IPOs during the same period a year ago. But we note that the 2025 line-up raised only $31 billion in capital. The delta here is the advent of AI. In 3Q, South Korean semiconductor company SK Hynix raised $26.5 billion and opened on the Nasdaq market with a market cap above $1 trillion. It was following in the footsteps of SpaceX, which raised $75 billion in its IPO and currently boasts a market cap around $2 trillion. First day IPO performance was a bit weaker than normal in 3Q. Among the 27 IPOs, 13 opened in positive territory compared to pricing, while 11 opened lower, and three were unchanged. The average at-the-open return was 7%, below 15% in 1H26 and the long-term average of 17%. Most of the top performers in 3Q, including the top five, came from biotech. In the quarter, there were four IPOs that raised $1 billion or more, compared with 10 in the prior quarter. We think the IPO market's primary near-term driver remains the AI space. AI leaders Anthropic and OpenAI both confidentially filed S1s in June. Though both have pushed out their respective timelines compared to initial targets, we expect both will go public with valuations exceeding $1 trillion.  more

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