I wrote here a week or so ago about the systemic effects of the upcoming troika of AI IPOs. Specifically, I talked about how funding shares purchases into even a modest float has consequences when you're dealing in trillions of dollars of gross market cap. A small-ish percentage of a very, very big number is still a very big number. That's math, people.
As I wrote previously, I created an IPO impact simulator to help model the impact of so much forced selling of other equities to finance Anthropix (Anthropic / OpenAI / SpaceX) purchases. It is, as I showed, highly material, especially across peer groups that are highly liquid and overlapping, like Microsoft.
Well, in the brief period since I wrote that, it has become obvious that I was underselling it. In particular, the implied IPO valuation of these companies has gone up: some private markets are suggesting over a trillion dollar value now for Anthropic.
At the same time, public vehicles holding private market shares in Anthropix are going parabolic. Case in point, DXYZ, a closed-end fund holding various private tech companies, including OpenAI, SpaceX, and Anthropic, albeit in modest percentages. The fund's stock has more than doubled in the last ten days, and is up 30% today alone.
While it seems likely was partly a short squeeze on a closed-end fund whose price was almost triple (!) its last posted net asset value, it's also the fervor for any exposure whatsoever to pre-IPO AI companies, in particular the Anthropix troika.
This will only get more dramatic in the coming weeks and months. Money will increasingly flood out of a host of financial nooks and crannies, and into anything with any connection to what's coming. The money has to come from somewhere, the appetite is immense.
I sometimes analogize the uutflows to what happens before tsunamis, as water is sucked away from the coast by the incoming water, piling up offshore, only to come smashing back in and smashing everything, much like the tragic Thai event years ago.
And the effects are showing up as well in real estate markets. People in luxury markets, especially mountain towns like Aspen and Jackson, report properties newly going for double what they were listed at a few months ago, often with multiuple bidders. An aquaintance reports a CEO friend unable to purchase in the Bay Area as pre-AI IPO money consistently outbids on everything.
Combining what I'm seeing—the huge NAV premium and price behavior of DXYZ, the recent private market price increase of Anthropix names, and the pre-IPO bidding wars in luxury real estate markets—it is clear my outsized estimate of the likely market cap of these names—a staggering $4 trillion total—was too low. I've adjusted the slides on my sim to allow larger numbers, and I now think it very likely we will be above $5 trillion in market value, and higher numbers remain possible. At the higher end we are approaching the inflation-adjusted market cap of all IPOS since WWII, including dot-com.