The president of Yardeni Research dismisses fears that three major artificial intelligence (AI) companies going public – SpaceX, Anthropic and OpenAI – will cause a liquidity drain in the stock market.
In a new blog post, veteran strategist Ed Yardeni says say that “we are not as concerned” as other analysts that the so-called “AI-3” is “going to suck the oxygen out of the rest of the stock market.”
Elon Musk’s rocket company SpaceX is expected to go public on June 12, while Anthropic and OpenAI are also preparing for their initial public offerings (IPOs).
Yardeni says that based on the history of IPOs, fears of a liquidity loss are largely unfounded.
“In any case, AI-3 should have no trouble raising $200 billion in the IPO market, which has funded $232 billion in new equity issuances over the past 12 months through April. More than $450 billion was raised in equity offerings in 2021.”
Yardeni also says what the AI-3 is expected to generate is just a fraction of the $75.6 trillion Wilshire 5000 and $60 trillion S&P 500, adding that the companies will offer a “limited offering” of shares to the public.
“The market cap of the Wilshire 5000 is $75.6 trillion. For the S&P 500, it is almost $60 trillion. Will these measures increase by $4 trillion to $5 trillion if the AI-3 goes public? Not based on free float, which is the shares available to the public to trade (excluding closely held stocks, insider shares and government holdings).
SpaceX only releases about 4.3% of its shares publicly. The other two AI-3 are also likely to offer a relatively small free float.”
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