IPO wave broadens access and should not create a supply overhang

Highlights: A wave of potentially large IPOs is upon us, and the debate is intensifying over whether new issuance could divert liquidity from listed stocks, thereby weighing on broader markets. We take a different view. Historical data show that a broadening opportunity set helps attract new money, and any related dips in stock indices have typically been rare, small and temporary. The upcoming pipeline spans across AI, energy & resource security, and defence – three areas which benefit from a major policy focus, rapid innovation and significant capital flows. We think investors will welcome the broadening choice to implement these themes, especially as exposure to them is often concentrated in megacaps. We maintain our bullish view on global equities, underpinned by innovation-led productivity gains and earnings growth.

• US IPO activity is recovering meaningfully, with H1 2026 volumes on track for their strongest half since late 2021. Recent listings have been well absorbed without disrupting the equity rally. This establishes an important baseline: rising issuance and strong wider index performance are not mutually exclusive
• A pipeline of private companies — which include SpaceX, OpenAI, Anthropic, Databricks, Stripe, ByteDance, and Anduril — is potentially approaching public markets. These names align with the three structural investment themes of our 2026 Mid-Year Investment Outlook: AI, energy and resource security, and defence. In our view, their listings would represent an expansion of investable opportunity, rather than a dilution of it
• The "vacuum cleaner" concern — that mega-IPOs could drain capital from incumbent tech leaders — is plausible in framing but weak in substance. Initial free floats are expected to be limited, and mega-IPO cycles historically attract incremental capital rather than simply recycling existing allocations
• Incumbent AI leaders are more likely to benefit than to be disadvantaged. Successful listings would validate structural AI demand and could reinforce the investment case for semiconductors, data centre infrastructure, and the broader AI ecosystem
• Short-term narrative risk and tactical rotation cannot be ruled out; however, any volatility should be contained and brief. The structural demand backdrop from the three themes remains the dominant driver
• Our overall assessment is constructive. The likely arrival of these companies in public markets deepens the opportunity set for investors. In that sense, the innovation cycle is broadening, not peaking