The huge IPOs of SpaceX and Anthropic could be the end of the bull market, BofA warned

The expected IPO of Elon Musk's space company SpaceX and AI startup Anthropic may be a signal of overheating of the stock market, rather than a new growth driver, warned strategists at Bank of America. According to them, the entry of several large technology companies at once may sharply increase the supply of shares on the market and put pressure on quotations.

IPO SpaceX and other large companies may increase the pressure on the shares of the "Magnificent Seven", said Savita Subramanian, equity strategist and quantitative analysis of Bank of America. Investors will have to sell some of their existing assets to make room in their portfolios for new placements, she explains.

About 60% of assets under management in the U.S. are in passive funds, which are heavily concentrated in the stocks of major technology companies. Retirees, who have about $8 trillion in cash in their accounts, are also more likely to be invested in dividend-yielding stocks than to build up positions in high-growth tech stocks. "This means that passive funds, all else being equal, will have to free up capital for new allocations, creating pressure on existing positions," Subramanian wrote.

In April, the S&P 500 index rose more than 10%, but on an equal-weighted basis it added only 6%. This suggests that the main growth was provided by the largest companies, while the rest of the market grew noticeably weaker, notes CNBC. If the growth in the U.S. market at the beginning of 2026 covered a wider range of stocks, the rally in recent weeks is mainly supported by the strong reporting of the "Magnificent Seven" - the largest technology companies, which account for about a third of the S&P 500 index, notes CNBC. S&P 500 in trading on May 7 fell by 0.4%.

New large offerings are being facilitated by US President Donald Trump's administration's initiative to deregulate public and private markets under the slogan "make IPOs great again". Against this backdrop, index providers are changing rules to get companies into indexes faster, CNBC writes.

The situation now resembles the late stage of the market cycle, a period when private investors are actively buying securities that institutional players are already starting to get rid of before a possible downturn, Subramanian said.

One factor in the recent rise of the U.S. stock market, she believes, has been the decline in the number of publicly traded companies. According to the Center for Research in Securities Prices (CRSP), the number of publicly traded securities has fallen from about more than 8,000 in the 1990s to about 4,000 last year. The shrinking number of publicly traded companies has been a key driver of U.S. stock market growth over the past two decades, but it may soon disappear, a BofA strategist warned.

"You can say goodbye to the bullish bet on a 'stock market squeeze'. Since the early 2000s, a combination of factors has systematically reduced the amount of public equity available: more paper buybacks, companies staying private longer, more frequent delistings, low rates, high liquidity, and so on. Now the market may be facing a veritable flood of new offerings," she wrote.

The influx of a large volume of new shares could noticeably change the structure of the stock market, which is already at record levels thanks to the growth of a small group of technology companies, according to a BofA strategist.

SpaceX, which may go public as early as June, expects a valuation of more than $2 trillion, Bloomberg wrote in April. Anthropic, whose IPO is expected in October, may be worth more than $900 billion after the latest round of financing.

This article was AI-translated and verified by a human editor