Wall Street is bracing for a historic shift as several multi-billion dollar technology giants prepare to enter the public markets. Strategists now warn that the upcoming wave of initial public offerings (IPOs) from industry titans could mark the absolute top of the current market cycle. Much like the frenzied atmosphere of the late 1990s, when every company with a dot-com suffix saw its stock price skyrocket, current investor sentiment suggests we might be witnessing the formation of a dangerous artificial intelligence bubble.
The most notable name on the horizon is SpaceX. After filing regulatory paperwork, the aerospace and data-infrastructure firm is expected to launch its massive public offering on June 12. Elon Musk’s rocket company is targeting an eye-watering valuation of $1.75 trillion on the Nasdaq. If the company hits this mark, it would officially become the largest public float in history. This sheer size alone creates a massive gravitational pull, drawing in billions of dollars from institutional and retail investors who are desperate to gain exposure to the AI trade.
However, SpaceX is not the only player looking to capitalize on this hype. Artificial intelligence leaders OpenAI and Anthropic have both announced their firm intentions to go public later this year. These firms occupy the center of the current AI revolution, and their arrival on the stock exchange would solidify AI as the dominant theme for the next decade of trading. Yet, there is a glaring problem beneath the surface of these massive valuations: very few of these companies currently generate an annual profit.
Investors who decide to buy into these IPOs at their current valuations are taking on significant risk. Anthropic is currently projected to post its first profitable quarter soon, but OpenAI remains deep in the red as it invests heavily in future growth. Strategists warn that investors have become far too comfortable with “opaque” business models, where the path to profitability is hidden behind complex layers of cloud computing expenses and aggressive research spending.
John Blank, the chief equity strategist at Zacks, recently warned that this behavior looks remarkably similar to the patterns seen in 1999. “I see it as a market top,” Blank explained during a recent television appearance. “Everybody knows the top is pretty close to being around, and usually it is advertised by these giant IPOs.” When the market reaches a state where private companies can demand trillion-dollar valuations before they have proven their ability to earn a profit, historical patterns suggest a painful correction is often looming just around the corner.
SpaceX’s own financials illustrate the risks involved in these “mega-cap” bets. The company recently reported a net loss of $4.28 billion for its latest quarter, following a loss of $4.94 billion in 2025. While the Starlink satellite division generated an impressive $3.26 billion in revenue, accounting for 69 percent of total sales, the company’s AI and space exploration units remain massive cash sinks. The space business lost $619 million, and the AI unit reported a loss of $2.5 billion. SpaceX relies almost entirely on its internet connectivity arm to keep the lights on.
Because these companies are so new to the public eye, “little is known” about their true financial health, according to Dan Coatsworth, head of markets at AJ Bell. He pointed out that a $1.75 trillion valuation for SpaceX would imply a price-to-sales ratio of 67 times, which is three times higher than Nvidia’s current market rating. If the company does not grow at an impossible rate, these valuations will collapse, potentially leaving everyday investors with massive losses.
The fallout could extend far beyond just these tech stocks. When companies like OpenAI decide to go public, they soak up a massive amount of liquidity from the market. To buy these expensive new shares, institutional investors often sell their holdings in other, more stable sectors. If these AI companies fail to meet the lofty expectations set by their valuations, the resulting sell-off could trigger a broader market downturn. As William de Gale of BlueBox Asset Management put it, “If OpenAI and Anthropic can’t make money, this whole thing falls apart.”
The stock market has always operated on the basic principles of supply and demand. Currently, the demand for AI exposure is nearly infinite, but the supply of high-quality, profitable AI stock remains extremely low. When companies rush to bring new IPOs to the market, they increase the total supply of stock. If that supply happens too quickly or at prices that defy logic, the market breaks down.
Investors should approach the June 12 SpaceX launch and the subsequent OpenAI IPOs with a healthy dose of caution. While the potential for high rewards is real, the history of the dot-com era serves as a grim reminder of what happens when speculation replaces fundamentals. If the underwriters choose to “engineer” a massive first-day price pop to generate headlines, they may be setting the stage for a crash that investors will regret for years.
