Bulls vs Bears EP120 — Rockets & AI IPOs
SpaceX files for what could be the world's largest IPO at a ~US$2 trillion valuation, OpenAI targets a fall debut at ~US$1 trillion, and the market has to decide whether it can absorb that much AI equity supply — all while navigating a global bond rout, a stalled Iran peace…
The week ending 22 May 2026 may ultimately be remembered less for Nvidia's earnings or the Iran war's latest twist, and more for the moment the AI boom formally asked public markets to put a price on itself. The IPO Wave SpaceX — which recently merged with Elon Musk's AI startup xAI — filed publicly for its initial public offering this week, targeting an implied valuation of approximately US$2 trillion. If achieved, it would be the largest public debut in history, dwarfing Saudi Aramco's 2019 record. The combined entity spans rockets, satellite internet, and artificial intelligence infrastructure, and the filing represents Musk's bid to crystallise years of private valuation gains into public-market capital. OpenAI confirmed in the same week that it is preparing to go public, targeting a debut in September or later in 2026 at an estimated valuation of approximately US$1 trillion. Deutsche Bank has already dubbed the offering "ChatIPO." OpenAI is not expected to be profitable for several years, and the IPO will ask investors to underwrite a bet on artificial general intelligence becoming commercially viable at a scale that justifies a ten-figure valuation from day one. Taken together, the two offerings represent close to US$3 trillion in new equity supply hitting public markets within months of each other — at a time when bond yields are at multi-decade highs, the cost of capital is rising, and investors are already questioning whether the AI rally has run ahead of fundamentals. How these listings are received will set the tone for risk appetite through the remainder of the year. A strong debut for either company would validate the AI trade and likely pull forward further technology capital raises. A stumble would raise harder questions about whether the private valuations assigned to AI companies over the past three years were ever grounded in reality. The timing is deliberate. Both companies are striking while the AI iron is hot — Nvidia's revenue is growing at 85% year-on-year, hyperscaler capex is headed toward US$1 trillion annually, and the S&P 500 is within reach of all-time highs despite a grinding geopolitical backdrop. Waiting risks a deteriorating macro environment. Going now means catching the wave at what may be close to its peak. Nvidia Sets the Context Nvidia's fiscal Q1 results, reported Wednesday, provided the clearest possible benchmark for the IPO frenzy. Revenue hit US$81.6 billion, up 85% year-on-year. Q2 guidance of US$91 billion beat consensus by US$4 billion. An US$80 billion buyback was announced. Jensen Huang told analysts that hyperscaler capital expenditure will reach US$1 trillion this year alone. "Compute is revenues. Compute is profit," he said. Shares fell nearly 2% on Thursday. With the stock up 36% from its March lows and trading at a significant premium to forward earnings, the market had priced in a beat-and-raise and received exactly that — which was no longer enough. It is a dynamic that SpaceX and OpenAI's underwriters will study carefully. A business can be extraordinary and still disappoint a market that has already priced the extraordinary in. The Macro Backdrop The Iran war entered its twelfth week with Hormuz still effectively closed and peace talks producing more false dawns than progress. A late-Thursday report that a "final draft" agreement had been reached sent oil sharply lower before being denied within hours by a senior Iranian source. West Texas Intermediate settled the week around US$97, down over 7% — driven by deal optimism rather than any actual change in energy flows. The more structurally significant story was in bond markets. The 30-year US Treasury yield hit 5.20% mid-week, its highest since 2007. Japan's 30-year hit 4% for the first time in history. Fed minutes released Wednesday confirmed that a majority of FOMC members believe rate hikes "would likely become appropriate" if inflation persists. Markets now price over 50% probability of at least one Fed hike in 2026. Kevin Warsh began his tenure as Fed chair into precisely this environment. Rising rates matter directly for IPO valuations. The higher the discount rate applied to future cash flows, the less today's investors should rationally pay for companies whose profits lie years in the future. OpenAI is not expected to be profitable for several years. SpaceX's xAI division is pre-revenue at scale. The bond market's message this week — that the era of near-zero rates that inflated private tech valuations is definitively over — is the single biggest risk to both offerings landing at their hoped-for valuations. The Week Ahead The AI IPO pipeline is now open. Whether public markets have the appetite, the risk tolerance, and the macro environment to absorb it is the defining question for the second half of 2026. Iran, rates, and oil will set the conditions. Nvidia's reaction to perfection delivered told you everything about how unforgiving those conditions currently are.
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