Bank of America warns potential SpaceX and OpenAI IPOs could push S&P 500 concentration to 48%, surpassing past bubble peaks.
Potential initial public offerings from SpaceX and OpenAI could deepen the artificial intelligence trade bubble as rising bond yields increase investor scrutiny of long-term growth. Bank of America estimates these IPOs may push S&P 500 concentration to 48% of U.S. market cap, exceeding peaks seen in the Roaring ’20s, Nifty Fifty, Japan’s 1980s, and the dot-com era.
Current market concentration stands at 40%, while inflation hovers near Bank of America’s 4% danger threshold for equities. Historically, when CPI crossed 4%, the S&P 500 averaged a 4% loss over three months and nearly 7% over six months. The 30-year Treasury yield has also risen, adding pressure on growth stocks.
Past mega IPOs have had mixed market impacts, with some fueling rallies and others coinciding with weaker markets. The broader backdrop, rather than the listings themselves, will likely determine outcomes.