This article first appeared on GuruFocus.
Wall Street is facing a new AI problem. Not demand. Supply. A wave of fresh shares from companies raising money for artificial intelligence could soon test whether investors have enough capital, and enough patience, to absorb it all. The warning shot came Friday after a report that Meta Platforms (NASDAQ:META) is considering raising tens of billions of dollars through a stock offering, pushing its shares down 5.5%. The Nasdaq 100 Index fell 4.8%, its worst session in more than a year, while the S&P 500 Index dropped 2.6%, its weakest session since October. Meta may only be the beginning. Potential IPOs from SpaceX, Anthropic and OpenAI could add close to $4 trillion in market capitalization to US exchanges, while Alphabet (NASDAQ:GOOGL) is planning to raise $85 billion next quarter by selling stock, mostly into the open market, to help fund AI data centers.
For now, the AI trade still has real buyers behind it. SpaceX’s planned IPO has reportedly attracted more orders than shares available, while the Philadelphia Stock Exchange Semiconductor Index is on pace for its best year since 2003 with a 74% gain. DataTrek Research co-founder Nicholas Colas said there is plenty of capital to absorb this year’s IPOs and stock offerings from public companies raising cash for AI. But the bigger risk may come after the debut. SpaceX expects to sell just 4% of its outstanding stock at first. Goldman Sachs data show large IPOs with initial floats below 10% have historically seen that share rise to around 46% one year after listing, implying roughly $1 trillion of new equity supply by 2027, before any direct corporate issuance.
That is where the pressure could spread. Faster index-entry rules from Nasdaq (NASDAQ:NDAQ) and FTSE Russell could force passive funds to buy SpaceX, Anthropic and OpenAI while cutting existing holdings to make room. A Bloomberg basket of OpenAI-exposed stocks is up 33% this year, far ahead of the S&P 500’s 7.9% gain, while Marvell Technology (NASDAQ:MRVL), which is building custom chips used by OpenAI and Anthropic, has surged 210%. If investors can finally buy the AI names directly, proxy trades could lose some of their scarcity premium, possibly affecting Nvidia (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO) and Tesla (NASDAQ:TSLA), which has long served as a retail way to bet on Elon Musk. SpaceX is expected to start trading Friday, but its $6.4 billion operating loss last year and targeted valuation above 90 times last year’s sales suggest this IPO wave could bring both huge demand and less room for disappointment.
