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- [00:06]
Jessica Mendoza
This year, Wall street is going to see three of the biggest IPOs of all time. SpaceX broke records on Friday, a huge headline today, the biggest IPO in history. At the closing bell, SpaceX is now worth over $2 trillion. That's with a T. An Anthropic and OpenAI are both set to go public at enormous valuations later this year. Open AI filing to go public about
- [00:35]
Sponsor Representative
a week after its biggest competitor, Anthropic
- [00:38]
Jessica Mendoza
did the same thing. Remember, Anthropic, the AI company behind Claude, has filed to go public, setting it up to be one of the biggest initial public offerings in history. OpenAI has filed to go public in a blockbuster IPO that could value the chatbots creator at more than $1 trillion.
- [00:55]
Spencer J. Jacob Wright
By some measures, this is the biggest year ever for IPOs.
- [00:59]
Jessica Mendoza
Our colleague Spencer J. Jacob Wright's investing
- [01:01]
Spencer J. Jacob Wright
column, as a matter of fact, just the one for SpaceX exceeds basically all of the IPOs that happened during the year 2000. Just to give you some perspective. So it's a lot of money being raised.
- [01:18]
Jessica Mendoza
Why is it happening now? What's in the water in 2026?
- [01:22]
Spencer J. Jacob Wright
Well, what's happening is that we've reached or maybe even passed peak excitement over AI. A lot of real money is being sunk into this technology and a lot of hope is riding on it. When you want to raise as much money as you can, when people are willing to pay you a lot of money for something.
- [01:41]
Jessica Mendoza
And how unusual is it to see so many huge IPOs all in one year?
- [01:46]
Spencer J. Jacob Wright
It's something that we've never seen before. I mean, if you look at SpaceX, Anthropic and OpenAI, assuming all the all three of those happened this year, plus there are some others, it's going to be a record year in terms of dollars raised. It exceeds anything that we've seen before.
- [02:05]
Jessica Mendoza
Welcome to the Journal, our show about money, business and power. I'm Jessica Mendoza. It's Monday, June 15th. Coming up on the show, the great IPO frenzy of 20.
- [02:32]
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- [03:05]
Sponsor Representative
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- [03:40]
Spencer J. Jacob Wright
I just bought 50 shares of SpaceX at 1.72per share and I'm never selling.
- [03:48]
Jessica Mendoza
I would not bet against an Elon
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Spencer J. Jacob Wright
when it comes to SpaceX.
- [03:52]
Jessica Mendoza
I'm buying $5,000 worth of shares and we're along for the ride.
- [03:57]
Spencer J. Jacob Wright
I would put my money in one place. In one place oni that is Elon Musk and the SpaceX play this is
- [04:03]
Jessica Mendoza
it the hype going into SpaceX's IPO was wild. Investors seemed excited about the vision that founder Elon Musk has for the company, a future that would see AI data centers in orbit and a human colony on Mars. By the end of the day Friday, it seemed clear that that excitement had translated into a successful ipo.
- [04:24]
Spencer J. Jacob Wright
In terms of its debut, the IPO did live up to the hype. It is the largest IPO ever. It traded up. The company was at various points in the day worth more than $2 trillion. It has moved between being the sixth or seventh most valuable company in the United States, or seventh or eighth in. And so far it gets an A or an A plus. I mean, the stock traded higher. So the good reception for SpaceX bodes well so far for those other AI related IPOs.
- [05:04]
Jessica Mendoza
Other AI related IPOs meaning OpenAI and Anthropic, like SpaceX. OpenAI and Anthropic have been raising big money from private investors for a while, but they plan to turn on the taps even more by going public as soon as this fall. What's not yet clear is which of the two companies will IPO first. So is this a race to go public? Why actively compete with one another?
- [05:30]
Spencer J. Jacob Wright
It is sort of a race, yeah, because you want to be the one who kind of strikes while the iron is hot, raises the most amount of money or gets the highest valuation and therefore you have the largest war chest or the most cheaply acquired war chest.
- [05:49]
Jessica Mendoza
No matter which company goes to market first, it could change the game for the other one.
- [05:54]
Spencer J. Jacob Wright
People tend to look at recent examples. If you have a recent example of a company that's done very well and made you a lot of money, then that sort of adds fuel to the fire. You have A validation that the next thing is going to do well. And then if it winds up doing very poorly, then it could kind of poison the well for those future ones.
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Jessica Mendoza
In other words, if the company that goes first does well, let's call it Company A, it could leave investors feeling confident and set up an even bigger IPO for company B. But if Company A doesn't do well, it could make it much harder for Company B to make as much money as they want.
- [06:30]
Spencer J. Jacob Wright
That's the sort of the basic equation that they're facing. And so that's why they've chosen this moment really to do it. Because it's not because these companies are all profitable, they're not all profitable. It's because the excitement level is very high. You know, you wait two, three years. Oh, let's just wait and see how well it does well, you know, the moment very well could have passed.
- [06:51]
Jessica Mendoza
At the same time that OpenAI and Anthropic are planning to go public, both companies are also locked in another kind of race. They both want to have the better AI model to dominate the AI market.
- [07:03]
Spencer J. Jacob Wright
As excited as people are about AI, the products really have to be good. And they are good. I mean, we all used either ChatGPT or Claude or both of them. We've used them and we've kind of been blown away by the things that they can do and how quickly they've advanced too. It's just in a pretty short amount of time. It's like they went from being in kindergarten to being sophomores in high school. Right. It is pretty cool what they can do, but the products kind of have to sell themselves and the business plans have to sell themselves. And they're kind of flaky business plans, let's be honest.
- [07:35]
Jessica Mendoza
Flaky as in developing and building out the infrastructure for AI costs a lot more than these companies are currently charging customers for the products. And neither have turned a major profit.
- [07:46]
Spencer J. Jacob Wright
When the dust settles, if you're going to believe all the commitments that have been made, trillions of dollars will have been invested in it. That's more than the Internet. That's more than railroads. It's more than any other big infrastructure. It's more than the Apollo project to reach the moon. We're getting close to it being as much as World War II defeating fascism. So it's that kind of level of investment.
- [08:13]
Jessica Mendoza
So can these huge companies, you know, SpaceX, anthropic, OpenAI, can they live up to all the hype? Like, can they make a solid profit off of that kind of Investment.
- [08:23]
Spencer J. Jacob Wright
You know, you're betting on these companies growing their sales at a pace that no company has ever done. Is it possible? Of course it is. You know, things change and this is a new technology. But, you know, the chances of that happening are not a slam dunk by any stretch of the imagination.
- [08:41]
Jessica Mendoza
What these companies are pitching is that these technologies will be incredibly profitable in the long term because over time the tech will get better and so the cost of running it will go down. And Spencer says a lot of retail investors seem to be buying into that idea.
- [08:58]
Spencer J. Jacob Wright
The reason that people are excited about it is because they see it as the next big thing. They read stories about people who bought into the Apple IPO, the Microsoft IPO in the 1980s, the Amazon IPO in the 1990s. And even though those were pretty rocky, there were ups and downs. They were mostly ups. You know, you got really, really rich eventually if you hung on. And you know, FOMO is the term
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Jessica Mendoza
for it, if you're missing out of missing the boat.
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Spencer J. Jacob Wright
Missing the boat, exactly. Just of missing out on some great thing.
- [09:31]
Jessica Mendoza
All the money flowing into these companies have meant that Anthropic and OpenAI will likely have valuations around a trillion dollars or more. And Spencer says that could put pressure on an already overhyped market. That's next.
- [09:56]
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- [10:27]
Jessica Mendoza
SpaceX and eventually Anthropic and OpenAI will be adding a ton of market cap into the technology space. And these IPOs are coming at a time when the US stock market is already heavily weighted into tech. The top 10 companies in the S&P 500 are all tech companies. And together they make up nearly 40% of the index's value.
- [10:51]
Spencer J. Jacob Wright
And what's also unusual about it is if you look at those 10 companies, all of them have some AI angle to them. Tesla kind of has an AI angle, Apple kind of does. Nvidia very much does. Microsoft, Amazon, Meta Alphabet, Broadcom, those companies all have some kind of finger or many fingers in the AI pie. And so it's never depended so much. Even in the tech bubble, you never had all the big companies really riding
- [11:20]
Jessica Mendoza
on One thing working concentration can drive huge gains. But historically it's also come with a lot of risk.
- [11:29]
Spencer J. Jacob Wright
You know, let's look at any transformative technology in the past and look at what happened. So any sort of, you know, mania or bubble starts generally with something real. You know, if you look at railroads, if you look at radio, if you look at the Internet, all those technologies that had a really transformative effect, they were real. People got very excited about them. There were companies in the stock market that were in those businesses. If you look at the companies that got into it early, only one or two or maybe three really wound up making a lot of money. When all was said and done,
- [12:05]
Jessica Mendoza
for example, there were clear winners and losers of the dot com era. Both Amazon and Pets.com had IPOs, but only one became a successful business. Those past bubbles were much smaller, at least compared to the size of the market now. And they involved a lot less risk for the general public. That's because there were fewer investors back then and Americans relied much less on the markets as a foundation for their wealth.
- [12:34]
Spencer J. Jacob Wright
Stock wealth has never been a higher share of Americans net worth ever. So it affects the way you think about your money and your future spending and your future self in the sense that you know, you're making plans for the future. You're like well I'm going to renovate the house and I'm going to do this or I'm going to do that or I'm going to travel or I'm going to retire a few years earlier.
- [12:55]
Jessica Mendoza
Also, many more people passively invest in the stock market today because retirement accounts like IRAs and 401ks often hold funds that track major US indexes like the Nasdaq 100, which means more of people's retirement funds are also heavily concentrated into tech.
- [13:14]
Spencer J. Jacob Wright
That's, that's not great because basically you, you can sort of be a, doing a conservative mom and pop kind of thing and just buying this index fund and kind of setting it and forgetting it and all of a sudden you have a not insubstantial exp to these new untested loss making companies. You know, it used to be much more kind of balanced. You had some banks, you had some oil companies, you had manufacturers, hotels, whatever. The weighting of tech and then of this industry specifically is, is kind of uncomfortably large right now.
- [13:46]
Jessica Mendoza
And because of the size of these IPOs, the funds that track major US companies will be forced to buy in at an enormous scale with all this cash flying around. There are some jitters too. Just this month the market reached an all time high, but it also had its worst day of the year. And that tension has Spencer thinking about an old Wall street allegory about a shoeshine boy.
- [14:13]
Spencer J. Jacob Wright
There is a famous anecdote that Joe Kennedy, the patriarch of the, you know, the Kennedys, the political family, those Kennedys, those Kennedys. John and Robert and Edward and others fought father. He at one point was one of the richest men in America. And famously he enlarged his fortune during the Depression when lots of people were wiped out or saw their fortunes cut in half or whatever. And so the story goes is that he went to get a shoeshine and his shoeshine boy was telling him about the stock market and giving him stock tips. He said, this kid seems to know as much about the stock market as I do. And he's been right as well. Just like kids on the Internet or in chat rooms had been right about a lot of things recently. And he said, you know, either, you know, something's wrong with me or something's wrong with the market. And so he famously sold a lot of his stocks and avoided losing his fortune during the great crash of 1929.
- [15:11]
Jessica Mendoza
The Shoeshine Boy story is about knowing when to pull out of the market. And it speaks to a question that looms for investors. Are they getting in at the bottom or buying at the top?
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Spencer J. Jacob Wright
People have asked me, hey, do you think that this is it? Is this the sign of the top? I don't know, because there are a lot of false alarms. Any kind of bull market is going to have a lot of false alarms where people say, okay, stick a fork in it, it's done. And they're wrong, they're too early.
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Jessica Mendoza
So, Spencer, do you think this IPO frenzy is an opportunity or a risk?
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Spencer J. Jacob Wright
Listen, I'm not a financial advisor, but I write this daily investing newsletter. But let's just take a step back and look at it this way. They could do well, they can't do very well. And I'll tell you why. It's because they're already so big. So if you look at any of these things in the past that turned into bonanzas. Apple, Microsoft, Netflix, what have you, right? They all were pretty small companies, not widely assumed to be the next big thing when they came to market. That's the difference is that you, you could make 100 times your money in those. You can't make a hundred times your money in a company that's already worth $1.75 trillion. Yeah, maybe it'll double, right? I mean, that'd be pretty good if it doubled. But there are a lot of other stocks that can double over a number of years just by kind of plotting growth. That that's not that doesn't sound that exciting, but that's a much more certain outcome. You know, these companies are spending so much money that, you know, even though AI is real and is a promising technology, you don't know that these companies are going to get really rich off of it. And so this is the moment that they've chosen to pounce. And by some measure, we might look back at this and say, wow, they really got away with murder because they raised an ungodly amount of money and they weren't even that good.
- [17:19]
Jessica Mendoza
That's all for today. Monday, June 15th. If you want to read more of Spencer's writing, check out his Markets AM newsletter. We'll link to it in our show Notes. The Journal is a co production of Spotify and the Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.