Why Jeremy Grantham's GMO thinks the colossal tech IPOs expected this year could be bad for the stock market

Investors are salivating at the chance to buy into private tech titans like OpenAI, Anthropic, and SpaceX when they potentially go public later this year, but the enormous influx of new shares in the market might not be a good thing.

According to research from asset management firm GMO, led by legendary investor Jeremy Grantham, the onslaught of mega IPOs set for 2026 could mean trouble for the broader market.

Stocks are subject to the laws of supply and demand like any other asset, and when more supply comes onto the market without an increase in overall demand to meet it, prices could drop. As these companies won't be part of the S&P 500 when they list, their IPOs could trigger outflows from the benchmark index as investors scramble to buy in.

"My prediction is that 2026 is going to see a level of IPO excitement that we haven't seen in a while. My guess is that at least two of the private giants (OpenAI, Anthropic, SpaceX) will go public, and this is likely to put pressure on the U.S. market later in the year," Ben Inker, GMO's co-head of asset allocation, said in a report last month.

"Historically, each 1% increase in market cap through IPOs eventually leads to approximately a 7.5% decrease in stock market price," he continued. "Post IPOs, initially, maybe the market rises, but longer term as more stockholders are able to monetize, that will create a challenge for the U.S. market."

The firm, co-founded and led by value investing legend Jeremy Grantham, has regularly expressed skepticism about the AI trade over the past few years.

Inker told Business Insider in December that the S&P 500 is due for negative returns in 2026, a call which is well outside the consensus on Wall Street. Inker cited a rotation out of the market's biggest AI names and said top opportunities in global equities markets include Japanese small-cap stocks and European value stocks.