Written by: Rita

Guide to Trends

In 2026, the U.S. IPO market's financing has exceeded $125 billion, breaking the record for the entire year of 2021. The market is concerned about two things. Is this a warning signal of the end of the cycle? Can the market absorb so many new stocks?

Goldman Sachs invited three experts: their chief U.S. equity strategist Ben Snider, IPO research authority Jay Ritter, and Acadian fund manager Owen Lamont. The three have differing views. Snider said there is no need to worry too much, that late-cycle signals have not appeared, and that the market's absorption capacity has been underestimated. Ritter stated that high issuance predicts lower returns, but this signal is only slightly better than random. Lamont said that an issuance wave is one of the four horsemen of bubbles, but it may mean the bubble has just begun, far from ending.

The consensus among the three is that the number of IPOs is far below historic bubble periods, and the first-day price increases have not spiraled out of control; true warning signals have not yet illuminated.

Record IPO Amounts, but Moderate Numbers

So far in 2026, U.S. IPO financing has reached around $125 billion, exceeding the record of $120 billion for the entire year of 2021. Goldman Sachs predicts it will exceed $200 billion for the entire year.

However, there are structural issues behind the numbers. The record financing amount relies heavily on the IPOs of a few super-large tech companies, with a single entity contributing the majority of the increase; the number of IPOs is actually not high. So far in 2026, only about 60 companies have gone public, slightly above the level from the same period in 2021, but far below the approximately 400 companies in 1999 and about 250 in 2021. Goldman Sachs' IPO barometer indicates that the current environment is merely normalizing, not booming.

Private equity and venture capital have accumulated about $4 trillion in unrealized value and are accelerating exits as the IPO window reopens. The AI theme has driven extraordinarily large transactions, with AI infrastructure needing massive financing, involving both IPOs and secondary offerings and bond issuances from existing companies.

Three People, Three Judgments

Ben Snider is the chief U.S. equity strategist at Goldman Sachs, and he believes there is no need to worry too much.

Snider believes that the late-cycle warning signals that the market is concerned about are not evident today. IPO activity is rising but not extreme, and IPO valuations are only slightly above historical averages, far below those from prior bubble periods. The total equity supply in 2026 accounts for only about 1% of the Russell 3000 market cap, consistent with the average from 2015-2019, and lower than the 1.5% in 2021 and 2% during the internet bubble.

Demand is also healthy. S&P 500 buybacks grew by 4% year-on-year in the first quarter, and strategic merger announcements increased by 100% year-on-year. The household sector has shifted from being net sellers during the internet bubble to being net buyers in recent years, with funds flowing in through ETFs and mutual funds. The foreign investor ownership ratio has increased from 6% in 1995 to the current 18%.

Although mega-cap companies have slowed their buybacks due to AI capital expenditures, sectors benefiting from AI, such as banks and semiconductors, are still expanding buybacks. Nvidia recently announced an additional $80 billion in buyback authority, with record total buybacks reaching $960 billion this year. Goldman Sachs expects total buybacks in 2026 to be around $1.3 trillion, enough to offset new supply from IPOs and expirations of lock-up periods.

Snider believes that IPOs have a self-regulating mechanism, where IPOs will only continue if demand is sufficient. If the market is unable to absorb the supply, it will naturally limit future issuances.

Jay Ritter is the director of the IPO Research Center at the University of Florida, and he believes there are signals, but they are weak.

Ritter points out that high issuance does indeed predict lower future market returns, but the accuracy of this prediction is only slightly above random chance, at about 52%. Judging market inflection points based on IPOs is unreliable; after Greenspan spoke of irrational exuberance in 1996, the market continued to rise for another 3.5 years.

In terms of IPO performance, Ritter’s long-term research shows that after excluding the first-day price increases, IPOs typically underperform the market in the three years following their listing. However, he emphasizes a few exceptions. The technology sector performs the best in the IPO market, with companies generating over $100 million in annual revenue generally keeping pace with the market, and dual-class equity structure tech companies tending to outperform. This structure allows for a large issuance of low-vote shares to incentivize employees while founders retain control through high-vote shares, providing management with a strong incentive to focus on share prices.

Owen Lamont is the senior vice president and portfolio manager at Acadian Asset Management, and he views the issuance wave as one of the four horsemen of bubbles.

Lamont is the most cautious. He views large-scale equity issuances as one of the four key signs of a market bubble, believing companies are smart and tend to issue shares when their stocks are overvalued. This signal was effective in 2021, when the massive issuance of SPACs and IPOs was a good time to underweight U.S. stocks.

However, he also emphasizes that an issuance wave does not necessarily mean the market will immediately peak. The IPO wave of the 1990s lasted several years, and the asset bubble in Japan in the late 1980s was similar. Therefore, an issuance wave might mean that the bubble has just begun, far from being over.

Lamont points out that he is more concerned about the first-day price increase. If the first-day increase far exceeds the normal range of 15% to 20%, entering the 100% or even higher range, as was common in 1999, that is a clear signal of speculative frenzy. Currently, except for a few exceptions, first-day price increases are not extreme.

Regarding IPO investments, Lamont has a vivid metaphor. An IPO is like a banana, needing to mature before it can be eaten. Waiting 1 to 3 years after listing to buy is a better strategy. He also warns that if a wave of debt issuance and equity issuance occurs simultaneously, that is a clearer negative signal, indicating that the entire corporate value may be overestimated.

Global Perspective: The Differing Stories of Europe and Hong Kong

Europe's situation is different from that of the U.S. Goldman Sachs global strategists Peter Oppenheimer and Guillaume Jaisson point out that equity financing in Europe has exceeded €200 billion over the past 12 months, but it only accounts for 1.7% of the market cap, slightly above the long-term average of 1.4%. After accounting for buybacks and redemptions, net supply is still slightly negative. Europe's real problem is not related to issuance scale, but rather a core issue of insufficient domestic fund inflow. In the past year, there have only been about 40 IPOs, far below the normal level of about 100. This can reinforce itself, as domestic investors exit the local market due to a scarcity of growth stocks, while growth companies choose other listing places to gain deeper capital pools.

Hong Kong's situation is more positive. In 2025, the Hong Kong IPO market experienced a strong recovery, with 119 companies going public and raising $37 billion. In the first half of 2026, 84 companies have already raised $27 billion, with an annual expectation of reaching $60 billion. The average return over the three months following an IPO is about 60%, with a median of about 20%, performing far better than in previous years. Goldman Sachs China strategist Si Fu predicts that in 2026, the Hong Kong market will see approximately $110 billion in equity supply, including $60 billion from new H-share IPOs and $50 billion from secondary financing, which will be easily absorbed by over $400 billion in multi-channel demand, driven by corporate dividends, southbound funds, and global capital reallocation.

Trend Perspective

The most interesting aspect of this Top of Mind article is the differing interpretations of the same set of data by the three respondents. Snider sees record amounts in IPOs but moderate numbers, concluding that normalization is happening. Lamont looks at the same data and concludes that a wave may be forming. Neither perspective is right or wrong; they simply differ in time dimensions. Snider focuses on the current supply-demand balance, while Lamont considers historical patterns. Both judgments can coexist: normalization is happening now, and it could turn into a bubble two to three years later.

Ritter's perspective provides another dimension. Historically, IPOs underperform the market in the early stages, but there are exceptions for the technology sector, large revenue companies, and dual-class shares. These exceptions show that indiscriminately shorting IPOs may lead to missing out on real winners. Nvidia was also part of the high-valuation tech IPO club when it went public in 1999 with a $600 million valuation.

Goldman Sachs' internal viewpoints are also worth noting. Snider, as a strategist, leans optimistic; Oppenheimer, as a strategist, focuses on Europe’s structural disadvantages; and Lynam, as a credit strategist, warns of market saturation in the debt market. The differing perspectives from different functions within the same institution are more insightful than any single conclusion.

Disclaimer

This article is an organization and interpretation of third-party brokerage research reports (Goldman Sachs, July 20, 2026) by Trend Research. The ratings, target prices, earnings forecasts, and related judgments quoted in this article are the opinions of the brokerage’s analysts and represent only their institution's views, not those of Trend Research, and do not constitute any investment advice.

The market has risks, and decisions should be made independently. This article should not be used as a basis for buying or selling any securities.