Market Snapshot is a weekly view from our portfolio managers, offering sharp, thematic insights into the trends shaping markets right now.
Fast reading
- SpaceX announces plans for the largest IPO on record.
- Anthropic files IPO documents with the SEC.
- Google parent Alphabet joins the party with a major capital raise to help with its AI build-out.
Tech sector capital raises took centre stage this week, with two bumper listings announced along with a major AI-related share sale.
The first of the IPO announcements, for US rocketry, satellite and launch infrastructure provider SpaceX, stands to be the largest on record with a targeted valuation of roughly US$1.77trn and potential proceeds of up to US$75bn.
The second, for AI behemoth Anthropic, saw the company file documents with the Securities and Exchange Commission (SEC), setting it up for a potential US$1trn valuation, according to reports.1
Meanwhile, Alphabet, parent company of Google, announced a US$80bn equity capital raise to fund its AI infrastructure build-out, then upsized and priced it at $84.75bn two days later.
Investors appeared to welcome the developments, with the Nasdaq Composite rising 1.8% over the week, the S&P 500 Index gaining 1.5%, and the Information Technology segment within the S&P 500 climbing 4.8%. 2
Martin Todd, Senior Portfolio Manager, Sustainable Global Equity, Federated Hermes, highlights how Alphabet’s fundraise shows how this kind of spend is entering a more capital-intensive phase, with markets increasingly being asked to support the industrial AI build-out.
“Over the past year we’ve seen the AI opportunity set broaden beyond the hyperscalers themselves, with more of the value shifting to the infrastructure layer,” he says. “That includes not just semiconductors, but also the physical infrastructure, power generation and industrial supply chains required to support AI at scale. As spending continues to accelerate, those parts of the value chain are seeing capacity constraints emerge, and this is creating pockets of pricing power.”
According to Todd, the scale of planned AI-related investment indicates that the companies involved are confident of the long-term returns on offer. “As capital flows through the system, the number of beneficiaries should continue to widen,” he says. “This could materialise directly through infrastructure demand, and indirectly as improved AI capabilities begin to drive productivity and revenue growth across the broader economy.”
A growing IPO pipeline
For Jordan Stuart, Investment Director, Kaufmann, Federated Hermes, the news from SpaceX and Anthropic is another indicator of the rising tide of announced and expected IPOs.
He notes that so far this year, about 70 IPOs have been priced, with a significant portion of those stemming from the surge in private and venture capital during the Covid-19 pandemic. During that period, he says, start-ups and emerging technology companies raised substantial capital, enabling them to accelerate their business models.
“Roughly five years on, and many of these companies are now approaching public markets,” says Stuart. “But it’s notable that these firms are not merely incremental players: they’re increasingly positioned to leapfrog the dominant incumbents. Whether through more advanced processing capabilities, more efficient data centre utilisation, or breakthroughs in large language models, they’re pushing the technological frontier forward.”
According to Stuart, this development could mean that incumbents will be relegated to ‘utility-like’ roles in the next iteration of the tech ecosystem. “We’re already seeing pressure build,” he says. “Legacy software companies that once maintained strong control over proprietary corporate data are now facing the erosion of their competitive moats. Lower switching costs, improved interoperability, and more flexible coding frameworks are placing these business models under direct and sustained pressure. In other words, the newcomers may not just participate in the market – but reshape it – driving another period of innovation-led creative destruction and leadership turnover.”
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