Re-equitisation: investing in a high issuance era
A new wave of capital demand – led by technology and artificial intelligence (AI) champions – is likely to expand the supply of equity. This shift will reshape indices, valuations and volatility. In our view, the “re-equitisation” era will not necessarily be a headwind for returns, but it will change how investors think about risk and portfolio construction.
From de-equitisation to re-equitisation
Since 2005, US companies have collectively been net buyers of their own equity. Share buybacks have more than offset new issuance, which has steadily reduced the free float of listed shares. This “de-equitisation” cycle provided a powerful tailwind as equity demand rose and supply fell.
That pattern is now reversing. Buyback activity has fallen below equity issuance for the first time in two decades. In our view, 2026 could be a record year for equity issuance in the US market, with issuance potentially approaching USD 700 billion. The driver of this new cycle is intense demand for capital from a handful of US mega-cap technology firms that are building the infrastructure that will power a new technological revolution.
Recent and upcoming listings in space, communications, AI and adjacent sectors are breaking all-time records. SpaceX’s June initial public offering (IPO) became the largest in history, raising USD 75 billion and at a valuation in excess of USD 2 trillion. AI startups, such as OpenAI and Anthropic, plan to launch IPOs that are expected to attract exceptional demand and further increase the supply of high-growth, capital-intensive technology stocks.
2026 is likely to be a record year for equity issuance, USD billion
Source: Pictet Wealth Management, FactSet, Goldman Sachs Investment Research, as at 09.06.2026
2027 and beyond
We expect this “re-equitisation” trend to last for several years. Given the scale of these businesses and their insatiable appetite for capital, equity issuance could easily surprise on the upside into 2027 and beyond.
The biggest swing factor is follow-on sales after listing. Most companies float a relatively small slice of their equity at IPO and the bulk is sold later as predefined lock-up periods expire. SpaceX, for example, listed about 5% of its shares at IPO, leaving the remaining 95% subject to staggered lock-up periods over the next year or so. At current prices, the remaining 95% represents more than USD 2 trillion in additional potential supply. In practice, most of this stock is unlikely to come to market quickly. But even a modest fraction of these shares, combined with follow-on shares from the other forthcoming technology IPOs, could materially increase the net supply of US equities.
In the near term, initial selling by early SpaceX shareholders may be absorbed by passive-index buying as new entrants join headline indices. Over time, however, this passive demand dynamic could start to shift if other mega-cap IPOs arrive in close succession.
What are the risks?
For investors, the shift from de-equitisation to re-equitisation carries a number of important implications.
- Rising concentration risk. The new mega-cap IPOs will increase market concentration in at least two ways. First, it will increase the weight of US stocks in global equity markets. Second, it will increase the concentration of technology-related stocks in US indices. Equity markets that were already concentrated will become more so, increasing sensitivity to a handful of companies and sectors.
- Higher index valuations. The inclusion of three currently unprofitable mega-cap companies will put upward pressure on equity valuations for those indices that include the stocks. This should improve the long-term growth outlook for these indices, but the near-term impact on valuations will likely exceed the measurable impact on earnings.
- Greater volatility. Mega-cap IPO events and follow-on share sales can increase market volatility as investors reassess index composition, performance and capital flows. For example, in the run-up to the SpaceX IPO, we saw a sharp rise in Nasdaq volatility, both in absolute terms and relative to the VIX, a popular gauge of US equity volatility.
Should investors join the IPO wave?
Our view is that investors can participate, but with care. Investors should be highly selective about which new listings they buy and when.
History offers two cautionary lessons. First, most IPOs outperform initially, but performance tends to peak after two to three months and then decay over the rest of the year. Second, the return profile tends to be worse for larger deals. For IPOs valued above USD 3 billion, the median stock typically sees strong early performance but delivers negative returns after six months.
Most IPOs perform well initially but then tend to fade after two-three months
Source: Pictet Wealth Management, Bloomberg Finance L.P., as at 31.12.2025.
Note: it includes IPOs with an offering size above USD 1bn.
This does not mean investors should shun new issues altogether. It does mean that position sizing, timing and valuation discipline matter more than usual. Investors would be wise treat mega-cap IPOs as discrete, high-risk events rather than as automatic additions to a long-term portfolio.
Summary
We view the “re-equitisation” trend as the loss of a structural tailwind for equity markets rather than the start of a permanent headwind. A larger supply of equity from innovative firms creates a broadening investment opportunity. However, it will also make markets more volatile, more concentrated, and more sensitive to the performance of a few capital-intensive businesses. Investors must temper their enthusiasm for the latest technological breakthroughs with prudent risk management.
