Markets do not crash when investors are afraid. They crash when investors are convinced the rules have changed, when even the most cautious money managers find themselves crowded into the same trade because the alternative is missing the year. That is roughly where the US stock market sits in late May 2026. Tech now accounts…
Markets do not crash when investors are afraid. They crash when investors are convinced the rules have changed, when even the most cautious money managers find themselves crowded into the same trade because the alternative is missing the year.
That is roughly where the US stock market sits in late May 2026. Tech now accounts for more than 44% of the S&P 500, and the top nine names alone make up roughly 37.7% of the index. Retail traders are leaning long, volatility has gone quiet, and the artificial intelligence (AI) trade has rolled into a second straight year of double-digit gains.
Wall Street has seen this kind of single-sector dominance before, in 1929, in 1972, in late-1980s Tokyo and in 1999. Every one of those moments looked normal until it didn’t. The veterans who lived through any of the four have started saying so out loud.
This time around, the warning turned specific. Bank of America (BAC) strategist Michael Hartnett told clients that the coming initial public offerings of Elon Musk’s SpaceX and Sam Altman’s OpenAI could push tech’s weighting past every bubble peak on record, Bloomberg reported.
BofA’s Hartnett warns mega IPOs could push a risk bubble Photo by TIMOTHY A. CLARY on Getty Images
Why this Bank of America warning is different
Hartnett’s note did not bury the lede. He called the setup “so bubbly,” pointing to strong price action, retail mania, and slumping volatility as the classic warning signs, according to TipRanks.
More AI:
The math is where it gets uncomfortable. Hartnett’s argument is that adding SpaceX, OpenAI and possibly Anthropic to that pile pushes concentration past the 48% peak that defined every major bubble of the past century, from the Roaring 20s through the dotcom boom, according to Bloomberg.
That 48% line is the one I keep circling back to in my analysis. It is not a forecast. It is a historical pattern recognition. Markets that have reached that level of single-sector dominance have eventually given a chunk of it back, sometimes violently.
For everyday investors, the practical issue is simple. If you own a low-cost S&P 500 index fund, your “diversified” portfolio is already heavily exposed to seven or eight stocks. Adding SpaceX at a possible $1.75 trillion valuation and OpenAI at a target near $1 trillion would tighten that grip further, according to CNBC.
That is what is keeping veteran strategists up at night.
Related: Jim Cramer has a surprising take on Elon Musk’s OpenAI loss
How SpaceX and OpenAI could drain the market
Sources put the SpaceX listing on track for a June 12 Nasdaq debut at a valuation near $1.75 trillion, with about $75 billion in shares expected to price, according to CNBC. That alone would be more than double the previous record, set by Saudi Aramco in 2019, according to Crunchbase.
The structural concern is liquidity. “History tells us that a mega IPO like SpaceX can suck up the oxygen in the market. We saw that with Facebook in 2012,” Renaissance Capital’s Matt Kennedy told Reuters.
Just 35 IPOs had priced as of April, down 37.5% from the year prior, according to Reuters. Companies that have waited years for a listing window may now sit out the months around SpaceX rather than fight for attention.
CNBC’s Jim Cramer made the math even more vivid. He warned that if underwriters release only a thin slice of stock, SpaceX could spike toward a $5 trillion valuation on scarcity alone. “SpaceX would create a bubble unto its own,” he said, according to CNBC.
This is where the personal finance read-through gets sharper. If you have a 401(k) that rebalances into a target-date fund next month, those new SpaceX shares may land in your portfolio whether you want them or not.
Why the 48% line keeps coming up
Every modern bubble looked normal on the way up, and every one of them eventually had a 48% problem. The Roaring 20s peak, the Nifty Fifty of the early 1970s, Japan’s late-1980s mania, and the dotcom boom of the late 1990s all crested as a single sector or theme pushed past that same concentration threshold.
Some quick context on what is actually about to hit the market:
SpaceX filed its S-1 on May 20 targeting a Nasdaq listing under ticker SPCX, according to Crunchbase.
OpenAI is preparing a listing as early as September at a valuation near $1 trillion, according to CNBC.
Anthropic has hired Wilson Sonsini for IPO prep, with bankers expecting a raise over $60 billion, according to Reuters.
Combined potential market cap of the three approaches $3 trillion, according to Bloomberg.
When I ran the numbers against the IPO market’s recent history, the imbalance jumped out. From 2016 through 2025, the entire US IPO market raised $469 billion, according to analyst Tomasz Tunguz. SpaceX, OpenAI and Anthropic combined could need to raise between $432 billion and $576 billion in a single quarter at standard float ratios, per the same analysis.
That is a decade of IPO activity compressed into three deals.
What it means for your portfolio
Not everyone is convinced this ends in tears. Michael Burry, the contrarian best known for calling the 2008 subprime crisis, has publicly said the coming IPO wave is unlikely to mark a bull-market top, according to Stocktwits.
Hartnett himself has acknowledged that the actual catalyst for past bubbles popping has usually been a rise in bond yields, not the IPO itself, according to TipRanks.
For readers checking their accounts, the practical takeaways are narrow but worth noting. The math says broad index funds will get more concentrated, not less, in the second half of 2026. Equal-weight ETFs and ex-tech funds quietly become more interesting on a relative basis. And the IPO wave, when it lands, will not be a one-and-done event.
The next twelve months will tell us whether Wall Street’s bubble veterans were early, right, or simply louder than usual.
Related: Main Street can now bet on OpenAl, SpaceX through Polymarket
This story was originally published by TheStreet on May 24, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
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