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Summary
SpaceX, OpenAI and Anthropic are set for public offerings at eye-popping valuations. The AI boom they’re riding is a reminder of past booms and busts—from railways to dotcoms. But this is a different story. And a bigger challenge for rational investors.
Investors have been here before. A transformative technology arrives, valuations detach from earnings and markets start pricing the future today. Capital markets financed booms in railways, dotcoms, social media and crypto plays, only to watch many companies collapse once reality caught up with what former Fed chair Alan Greenspan called ‘irrational exuberance.’
Investors are now being asked to bankroll a new crop of companies whose sky-high valuations depend less on what they earn today than what they might achieve someday. Think of the interplanetary ambitions of SpaceX or the quest for artificial general intelligence (AGI) at OpenAI and Anthropic.
With initial public offerings (IPOs) lined up in the US, these three American companies are expected to seek $220-250 billion from investors at large. Their valuations would be eye-poppers: SpaceX worth almost $1.8 trillion, with OpenAI and Anthropic both looking at $1 trillion each.
A sudden expansion in market capitalization of such magnitude, even if only a fraction of their shares will be free-float, would need a lot by way of business prospects to justify.
Big Tech IPOs of the past differed on one key aspect: they had a clear money-spinner to sell. Google’s IPO was basically a bet on online advertising and Alibaba’s was a wager on e-commerce, while Facebook’s was a social- network advertising play.
Today’s tech trio are long on vision but short on delivery, with their offers pitched disproportionately on the ‘vision thing,’ a dismissive term popularized by a former US president.
Many analysts have billed SpaceX as grossly overvalued. Its merger with xAI, also owned by Elon Musk, has complicated its appeal as a business. Its space arm, famous for reusable rockets and satcom services, aims to place data centres in orbit to give its AI efforts an edge, but their union left the combine with a net loss of almost $4.3 billion in the first quarter of 2026 on revenues of $4.7 billion.
As for the other two, Anthropic’s reported ‘run rate’ of $47 billion in annualized revenue and OpenAI’s estimated $25 billion are impressive, but what they actually log over the year is what matters.
They could show hockey-stick upshoots, sure, but that would demand mass adoption of their AI tools by paying customers. Enterprises could lead the way, but they are especially sensitive to failures that can range from cooked-up stuff to rogue action. The risk factors seem limited only by the frontiers AI is yet to reach.
Looking back, network-infra company Cisco became the world’s most valuable firm during the 2000 dotcom boom, only to lose 86% of its value over the next two years.
There is no saying if the AI frenzy will end the same way—in a bust. Back-up infrastructure is being built at a furious pace; Goldman Sachs projects $7.6 trillion spent on it till 2031. Whether the build-up will overshoot or prove insufficient is another question.
As an industry, AI need not be a bubble, even if inflated stocks undergo selloffs as exuberance runs into reality. Investors who dismissed Amazon and Google for ambitions that seemed too big missed opportunities of a lifetime. The dotcom crash of 2000 did not kill the web, but served as a reality check for a sobered-up internet to emerge; Cisco regained its mojo, even if it took 25 years.
If an AI bust does happen, it could re-allot industry assets and resources for survivors to press ahead. Some investment advisors have said that it’s better to let the stardust settle and make AI picks once company valuations find an anchor in value generation. For now, this IPO season is a test of investor intelligence.
English (US) ·