The head of Yardeni Research dismisses fears that three major artificial intelligence (AI) companies going public — SpaceX, Anthropic and OpenAI — will drain liquidity in the stock market.
In a new blog post, veteran strategist Ed Yardeni He says “We are not as worried” as other analysts that the so-called “AI-3” will “suck the oxygen out of the rest of the stock market.”
Elon Musk’s rocket company SpaceX is expected to go public on June 12, while Anthropic and OpenAI are also gearing up for their initial public offerings (IPOs).
Based on the history of the IPO, fears of a cash drain are largely unfounded, Yardeni says.
“In any case, AI-3 should have no problem raising $200 billion in the IPO market, which has funded $232 billion in new stock issuances over the past 12 months through April. During 2021, more than $450 billion was raised through stock IPOs.”
Yardeni also says that what AI-3 is expected to raise is just a fraction of the $75.6 trillion of Wilshire 5000 stocks and $60 trillion of S&P 500 stocks, adding that the two companies will offer a “limited supply” of shares to the public.
“The market capitalization of the Wilshire 5000 stock is $75.6 trillion. It is close to the $60 trillion of the S&P 500. Will these measures increase by $4 trillion to $5 trillion when AI-3 goes public? Do not rely on free float, i.e. stocks available to the public for trading (excluding closely held stocks, insider holdings, and government stakes).
SpaceX is only offering approximately 4.3% of its shares to the public. The other two AI-3s are also likely to provide relatively little free float.
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