GMO Warns AI Stock Surge Could Cut Returns 20%

Asset management firm GMO warns that a surge in U.S. stock supply could dampen equity returns by approximately 20% relative to normal over the next 18 months. The firm identifies a coming wave of supply driven by secondary issuances, mega-IPOs, and the unlocking of insider shares from Space Exploration Technologies Corp.

Analysts Ben Inker and John Pease suggest this supply glut could act as a catalyst to pop the AI bubble. They estimate that upcoming public offerings from OpenAI and Anthropic represent about 5% of the total investable market cap, while SpaceX sales account for roughly 1% of the total U.S. market value. GMO notes that current passive and constrained markets have fewer buyers willing to absorb such significant new equity supply.

This warning follows a record-breaking first half of the year. According to the United States Securities and Exchange Commission, new public companies raised over $137 billion, representing a nearly 400% year-over-year increase.