A pipeline of mega-cap private companies is headed toward public markets, potentially reshaping the equity landscape when they arrive. SpaceX, Elon Musk's aerospace, satellite communications and artificial intelligence (AI) company, is the first. It has a target IPO valuation of around $1.8 trillion, raising capital of up to $75 billion in the process.
To put that in context: oil major Saudi Aramco’s 2019 offering, the largest in history, raised $25.6 billion on a $1.7 trillion valuation, while Alibaba’s 2014 deal, long the benchmark for technology IPOs, raised $21.8 billion and was valued at $170 billion. The SpaceX IPO is 10 times larger than the latter and we expect strong retail demand for the shares. But it will not be the only high-value public offering this year: Anthropic recently filed with the U.S. Securities and Exchange Commission and we expect OpenAI to be coming soon as well. Anthropic and Open AI raised capital in private offerings earlier this year at valuations approaching $1 trillion. This wave of listings will dramatically reshape the indices most investors track and further test the depth of investor demand for mega-cap tech following the record $85 billion equity offering last week from Alphabet, Google’s parent.
Three Businesses, One Valuation
Following its February 2026 merger with xAI, SpaceX is effectively three businesses: a launch operation anchored by its Falcon 9 rocket—which commands approximately 90% of global commercial launch market share—Starlink, its satellite internet company targeting about 100 million subscribers and $140 billion in revenue by 2030 (according to the IPO underwriters), and xAI, its artificial intelligence subsidiary. By 2030, xAI is projected to represent 70% of the business, with capital expenditure reaching $300 billion by that date, estimate the underwriters.
While some commentators have flagged an eye-catching 94 times annual revenues, we believe the more relevant valuation lens is 25 times 2027 enterprise value/sales—roughly comparable to Anthropic’s valuation in its last fund-raising round—based on a highly visible pathway through launch, connectivity via Starlink, and SpaceX’s recently announced Anthropic datacenter deal.
A Massive Change for Passive
An important discussion for investors is what SpaceX and other mega-IPOs mean for passive indices, given there is an estimated $30 trillion in global assets under management tracking them, according to our own research. Index sponsors are now making active decisions on when to include mega-cap names, at what weight, and how to adjust their rules to accommodate the anticipated frenzy of demand.
For example, Nasdaq recently shrank the window for index inclusion to 15 trading days for large-cap IPOs, and the FTSE Russell indices group said it would confirm if the fast entry threshold for inclusion is met based on SpaceX’s closing price on the first day of trading, currently expected to be on June 12. In contrast, S&P Dow Jones Indices said it would not reduce the standard window of inclusion from 12 to six months for mega-cap listings or waive the profitability requirements, which is the right call, in our view.
Importantly, on inclusion, a precise weight in the S&P 500 is hard to calculate. Under current plans, SpaceX would join the index in June next year, by which time more float would be available and the index itself would have moved. But at a current valuation of $1.75 trillion, with 53% of the float to be available come June 2027, we think that puts SpaceX at around $930 billion, roughly equivalent to a weight of 1.4% at the index’s current market cap of $65 trillion.
Yet the mechanical buying pressure is substantial: our base case suggests that index funds could absorb 24% of the float by day 15. This means passive investors will own shares in SpaceX without making an active decision to buy them.
Index inclusion will also require proportional selling of existing holdings to rebalance, principally from large-cap segments of the index and primarily technology stocks such as Apple, Microsoft and Nvidia. Another consideration is that lockup expirations (when private investors are first able to sell their shares following a company's IPO) periodically beginning after the company’s first earnings release and well before S&P 500 inclusion. This will likely add meaningful supply pressure.
Index Risk Is Worth Focusing On
If SpaceX, OpenAI and Anthropic all achieve full index inclusion over the coming quarters/years, the U.S. equity index picture will change dramatically. It will become even “growthier”, trading at higher multiples, and the historical valuation tools that investors have long relied upon will become increasingly difficult to apply. The cyclically adjusted price-to-earnings ratio (CAPE), for example, which many investors have used to argue bearishness on current valuations, will become far less relevant in a world where the index’s composition is shifting structurally toward companies with very high valuation frameworks.
Most investors, both individual and institutional, think about the risk of equity markets in terms of loss potential. For example, in the dot.com crash, the S&P 500 declined 46% (between March 2000 and October 2002), while the Nasdaq index declined 78% (over the same period). Today, the S&P 500's technology sector weighting is expected to expand to 54% (when including Alphabet, Meta and Amazon, which are actually not included in how the index reports its technology sector) from 51% following the inclusion of SpaceX, Anthropic and OpenAI (when full market cap is included). By comparison, the S&P 500’s tech sector weight peaked at about 35% in early 2000.
Investors need to appreciate the risk in the index will meaningfully change, and any declines in technology stocks this time around might be more painful than in 2000/2001. Those with significant passive allocations therefore need to understand this risk exposure as index construction shifts.
All in all, we are at an industrial inflection point: the AI buildout requires sustained fixed-asset investment, and, in our view, a barbell approach—pairing AI with energy, materials and industrials—can capture meaningfully different sources of return from the same secular trend. As a broader set of non-tech companies adopt AI in their core business, the margin and productivity enhancement will present attractive investment opportunities.
Fundamentally, we like equities and we believe in AI, but we also think there are other foundational drivers that deserve a place in portfolios, particularly as investors look to risk-manage through a period of froth and digestion around these sizable new names.
What to Watch For
Tuesday 06/09:
- U.S. Existing Home Sales
- U.S. Atlanta Fed GDPNow
Wednesday 06/10:
- U.S. Consumer Price Index
- Canada BoC Interest Rate Decision
- U.S. 10-Year Note Auction
Thursday 06/11:
- Eurozone ECB Interest Rate Decision
- U.S. Initial Jobless Claims
- U.S. Producer Price Index
Friday 06/12:
- U.K. GDP
- Germany Consumer Price Index