Could $350 billion of fresh stock from Alphabet, Anthropic and SpaceX crash the AI bull market?

The AI trade has had everything go its way, sending AI-heavy benchmarks like the Nikkei, Kospi and Taiex to the moon, and the household S&P 500 and Nasdaq into record territory.

The Kospi has doubled year-to-date, a pace no other major market has matched, while the Taiex is up 55% and Nasdaq up 20%.

But the rally now faces a serious test of demand.

Over the next few months, four companies alone are set to raise more than US$350 billion in equity:

• Alphabet: $85 billion of equity issuance to fund AI capital spending
• SpaceX: an IPO of about $75 billion at a valuation approaching $1 trillion
• Anthropic: raising at a $965 billion post-money valuation, up 53x from late 2024
• OpenAI: about $100 billion at private market levels
  

That is a third of a trillion dollars of new paper from four names, landing in a market that has spent two years bidding up anything attached to the word AI.

Alphabet's record-breaking raise

Alphabet upsized its equity raise to $84.75 billion from the $80 billion announced just three days ago, and it is the company's first equity offering in more than 20 years (and more than 10x all prior identified primary raises combined).

This is a sharp reversal for a business that spent most of the past 15 years buying back stock, and whose long-term debt has gone from close to zero in 2007 to $91.4 billion over the last 12 months.

The deal includes a $10 billion placement to Berkshire Hathaway and a $40 billion at-the-market program, where the company offloads shares directly into the open market in the September quarter.

The $84.75 billion raise will smash the previous record for equity offerings, set by Brazil's Petrobras at $70 billion in 2010.

The numbers on supply

Goldman Sachs says the total US equity supply could top $1.17 trillion this year, comprised of:

• $255 billion of IPOs
• $450 billion of other corporate stock sales
• $500 billion in selling from executives and early investors in those IPOs

The Financial Times notes that big IPO years tend to come before big downturns, and that even one mega float could give the market a mild case of indigestion. The combination, it warns, "could prove painful".

The historical comparison is a rather uncomfortable one. Total supply across 2020-21, including the IPO and SPAC boom that marked that cycle's top, came to about $385 billion. This year is only half done and roughly $400 billion has already been completed or announced. Add in the tens of billions of debt the hyperscalers have raised for AI data centres and the supply picture has no real precedent.

An army of future sellers

The other thing to consider is the hundreds and thousands of founders, venture investors and employees at Anthropic, OpenAI, SpaceX, Databricks, Stripe etc. that have quietly become millionaires off the back of these upcoming and potential IPOs.

Each one is a future seller, whether at IPO, at lockup expiry or at the next tender offer.

The people closest to these assets are all trying to convert paper into cash. It might not come in one go, or break the market, but another source of selling.

Another perspective

Sage Road Research, an independent markets research firm, argues the market's structure makes it unusually sensitive to a supply shock. Market resilience since the Global Financial Crisis has partly rested on the rise of passive investing, the firm wrote in February. Passive flows stay positive regardless of price, fewer dollars sit with active managers who trade on valuation, and the result is a market that is less elastic than it used to be.

The academic backing comes from Harvard's Xavier Gabaix and the University of Chicago's Ralph Koijen, who found that a dollar of fresh cash flowing into equities pushes up aggregate market value by $3-8, because demand does not fall much as prices rise.

That mechanism has amplified every dollar of inflows on the way up. Nobody knows how it behaves when a wave of new shares arrives instead, because an IPO cycle of this size has never met a market where passive vehicles control this much money. Sage Road warns that the benefits of inelasticity on the upside "could do the equal and opposite on the downside".

Living up to expectations

Now don't get me wrong. The AI supply chain is posting some extraordinary growth and earnings. But recent headlines have from growth and consumption at any cost, to a new focus on guardrails around spending and intensifying competition.

• Uber recently set usage caps on AI coding tools after staff blew through the company's entire annual AI budget in a few months
• Walmart did the same with a tool for generating spreadsheets and presentations, walking back its policy of giving employees unlimited tokens
• Starbucks quietly retired its AI inventory just months after deployment after it miscounted inventories and made persistent errors
• One unnamed company reportedly spent $500 million on tokens in a single month after rolling out Anthropic's Claude to its workforce without any usage limits

My favourite example comes from Sam Altman, who says cost has become a major customer concern almost overnight.

"Probably the second biggest theme is just around cost," he said. 

"People are really saying, that's kind of become a meme now, but 'my company spent my entire 2026 budget in Q1. Can you make this more efficient?' That went from, at the beginning of this year, an issue that never came up, I know people were totally happy with the amount they were spending, to all of a sudden a huge issue."

The bottom line

An epic amount of capital has flowed into equity markets. Passive flows, dip buying and the desire for AI exposure pushed the Vanguard S&P 500 ETF (VOO) past US$1 trillion in assets on 4 June, the first fund ever to hit that milestone. Over in South Korea, pensioners are increasingly leveraging their retirement savings to chase names like SK Hynix and Samsung. 

But with demand this frothy, the real question is whether it can absorb more than US$300 billion in IPO supply and a collective US$1 trillion in broader equity issuance (or maybe this is a cataclysmic exit liquidity avalanche).