OpenAI IPO Approaches; Top Economist Explains Why a Bubble Isn’t Here Yet
Despite the soaring valuations in the tech sector, a notable economist argues that the U.S. stock market is not facing a significant bubble at this time. Owen Lamont, a portfolio manager at Acadian Asset Management, emphasized that current market conditions lack critical indicators typically associated with financial manias.
Understanding Current Market Dynamics
As of early 2026, the S&P 500 index reached a historic milestone, crossing the 7,000 mark for the first time. Lamont asserted that the absence of large-scale equity issuance, often characterized by executives selling off overvalued stocks, is a key reason he doesn’t view the market as a bubble. He defines a bubble as a scenario where “smart money” investors rush to sell assets, signaling overvaluation. According to him, the smart money currently does not appear to be acting in a manner consistent with a bubble.
The Four Horsemen of a Bubble
Lamont’s framework for identifying bubbles consists of four critical components: overvaluation, bubble beliefs, equity issuance, and inflows. Although he acknowledges that high valuations and increasing retail investor participation are present, he believes the lack of new stock issuances disqualifies the current market from bubble status.
- Overvaluation: Current stock prices appear high.
- Bubble Beliefs: Retail investors are increasingly optimistic.
- Issuance: There is a notable absence of new IPOs.
- Inflows: Investment inflows into stocks have increased.
In fact, U.S. companies have repurchased approximately $1 trillion in stocks over the past year, further indicating a lack of equity issuance. This contrasts sharply with periods like the dot-com craze and the speculative burst of 2021, when new IPOs flooded the market.
Historical Context and Future Predictions
Reflecting on financial history, Lamont compared today’s conditions to notable market cycles, such as the Japanese bubble of the late 1980s. The Shiller CAPE ratio is one of several indicators he mentioned, revealing that current market valuations, while high, do not reach the extremes of past bubbles.
Lamont expressed curiosity over why there have not been more IPOs in the current environment. In contrast, the late 1990s saw over 400 IPOs in one year. Looking ahead, Lamont posited that if significant private firms enter the public market, such as SpaceX, it may signal peak market activity.
Market Sentiment on AI Investments
Many analysts share Lamont’s view that today’s AI investments resemble a rational gamble rather than a speculative bubble. The current wave of capital expenditure, particularly among tech giants, is viewed as strategic growth rather than irrational exuberance. Lamont compared this to historical investments in transformative technologies, including railroads.
Anticipating the Future of IPOs
Signs suggest an impending IPO mega-cycle. Industry leaders, like Blackstone and Goldman Sachs, predict unprecedented IPO volumes in the coming years. They foresee significant deal sizes that may outpace past boom periods.
Notably, there are reports that OpenAI plans to go public in late 2026, highlighting a potential trigger for an influx of subsequent IPOs. If substantial private companies initiate this trend, it may indicate the closing chapter of the current market cycle.
Overall, while high valuations and investor enthusiasm abound, Lamont’s insights suggest that the critical signs of a bubble, particularly concerning equity issuance, are still absent from today’s market landscape.
