Michael Hartnett, a strategist at Bank of America, told Bloomberg that planned initial public offerings by SpaceX and OpenAI could increase the technology sector’s weight in equity indices to levels that may exceed concentration seen during past market bubbles.
Hartnett noted that Elon Musk’s SpaceX is preparing what would be the largest IPO in history, while OpenAI — the company behind ChatGPT — is aiming to go public ahead of Anthropic. These massive share issuances would further fuel optimism around technology and artificial intelligence, a force that is already driving one of the narrowest market rallies in recent decades.
He listed classic bubble signals — strong price gains, a retail investor mania and falling volatility — and warned that including the big IPOs among major AI-related companies could push market concentration past previous bubble peaks.
Hartnett pointed out that equity concentration has historically peaked at around 48% in episodes such as the 1920s, the Nifty Fifty era, the Japanese asset bubble and the dot-com boom. Technology already makes up more than 44% of the S&P 500 today.
Rising concentration creates practical problems for asset managers, whose risk-management rules often prevent them from fully mirroring the large sector weights that develop in indices. Highly tech-skewed indices can also mask underlying weaknesses in other sectors that better reflect the economy’s health — for example, consumer and financial stocks.
Reviewing past large IPOs, Hartnett found that listings such as Saudi Aramco or Meta ultimately had little lasting impact on broader equity markets. In other cases, following debuts like Visa or AIA Group, markets were trading at lower levels 9–12 months later.
Hartnett argued that rallies and bubbles typically end when bond yields spike. He also correctly anticipated last year the outperformance of international equities and benefited from an optimistic stance on commodities.
This article is not investment advice or a recommendation.
