Will the US IPO Boom Rekindle the Dot-com Bubble? Goldman Sachs: Bubble Warning Not Yet Triggered

The US initial public offering (IPO) market, dormant for nearly four years, is showing clear signs of recovery this year. According to the latest estimate from Goldman Sachs, total US IPO fundraising for 2026 could reach $225 billion, setting a new historical high—nearly double the 2021 record. This surge has sparked market debate: is the capital market returning to normal, or are we reliving the 1999 dot-com bubble or the 2021 frenzy?

In its latest 'Top of Mind' report, Goldman Sachs offers a key insight: while fundraising volume alone suggests an unprecedented boom, when factoring in deal count, company valuations, earnings quality, and overall market supply-demand dynamics, this does not yet qualify as a true 'IPO wave'.

Ben Snider, Goldman Sachs’ US Chief Equity Strategist, notes that US IPO fundraising has already surpassed $125 billion this year, exceeding the full-year 2021 total of approximately $120 billion. Including deals exceeding $25 million, the full-year figure could reach $225 billion.

However, in terms of deal count, the US has completed around 53 to 60 IPOs year-to-date, a year-over-year increase of over 50%—the strongest start since 2021—but still far below the 25-year annual median of about 100 deals. It pales in comparison to over 250 listings in 2021 and nearly 400 deals during the 1999 dot-com peak.

In other words, the most notable feature of this year’s IPO market is not a 'stampede to go public', but rather a few mega-deals significantly inflating the total fundraising volume.

Three Forces Driving the Recovery: End of Rate Hikes, PE Fund Exits, and the AI Boom

The analysis identifies three interwoven drivers behind this IPO revival.

First, macroeconomic conditions have improved. The Federal Reserve’s (Fed) rapid rate hikes in 2022 severely hurt growth company valuations, especially tech firms with longer cash flow recovery periods and delayed profitability—precisely the types dominating IPO candidate lists.

Since then, the rate hike cycle has ended, US equity valuations have rebounded, and corporate earnings continue to grow. Many private companies are once again approaching prior valuation highs, making public listings more feasible.

Second, pressure from private equity (PE) firms. After years of constrained exit channels, PE funds face increasing pressure to return capital to investors. The unrealized portfolio value held by global PE funds has hit a record $4 trillion. With public markets reopening, mature projects accumulated over years are now accelerating toward listing.

Third is the AI boom itself. The AI surge is, in many ways, a capital expenditure boom—data centers, chips, power, and computing infrastructure require massive funding, allowing a few projects to raise far more than traditional IPOs.

Snider believes that even excluding AI-related themes, 2026 would still likely be the most active IPO year since 2021. But without a few AI-related mega-deals, total fundraising would shrink significantly, and investors would more likely view this rally as a market normalization rather than a bubble reprise.

Bubble Warning Not Yet Sounded

However, according to several traditional bubble indicators, Goldman Sachs believes the alarm for a past IPO bubble has not yet sounded.

On valuation, the median 'enterprise value to sales' ratio for recent US IPOs is about 5x—higher than the 30-year median of 4x, but notably lower than 9x in 1999, 7x in 2021, and 11x in 2020.

Earnings quality also surpasses previous bubble periods. In 2025, 43% of listed companies turned profitable in their first quarter post-listing, far exceeding 28% in 1999 and 24% in 2021—indicating this IPO wave is not led by a flood of revenue-less, cash-burning startups.

First-day IPO performance has also been relatively restrained. Typically, US IPOs rise 15% to 20% from offer price to closing on the first day. During the 1999 dot-com bubble, doubling on the first day was not uncommon.

Yet, aside from a few cases, such extreme surges are not frequent, suggesting speculative sentiment has not yet gone fully out of control.

Not everyone shares this optimism. Owen Lamont, Portfolio Manager at Acadian Asset Management, takes a more cautious view. He identifies stock issuance booms as one of the 'Four Horsemen' of market bubbles, arguing that companies typically issue shares when they believe their stock is overvalued.

Lamont warns that if the issuance boom spreads to many companies and concentrates in specific sectors like AI, it could signal that the broader market or that sector is overvalued.

He emphasizes, however, that a rising issuance trend does not mean the market is about to peak: both the 1990s US IPO boom and Japan’s asset bubble lasted years, and issuance booms often mark the 'beginning' of a bubble, not its 'end'.

Jay Ritter, IPO research expert at the University of Florida, notes that high issuance volume historically correlates with lower future market returns. But he adds that this indicator’s accuracy in predicting market direction is only about 52%, barely better than a coin toss, making it insufficient alone to determine if US stocks have peaked.

Can Supply Be Absorbed? The Real Test May Come in 2027

The analysis suggests that a more realistic question than 'is it bubbling?' is whether the market can absorb the growing supply of new shares.

Goldman Sachs estimates that total US corporate equity issuance in 2026—including IPOs, follow-on offerings, convertible securities, and SPACs—will reach about $700 billion. This equals roughly 1% of the Russell 3000 Index’s total market cap, comparable to the 2015–2019 average, below 2021’s ~1.5%, and far below the dot-com peak of ~2%.

Demand remains strong. In Q1, S&P 500 buybacks rose 4% year-on-year, and strategic M&A announcement value doubled. During the dot-com era, US households were net sellers of stocks, but in recent years, they’ve become net buyers via ETFs, mutual funds, and retail trading. Foreign ownership of US stocks has also risen from 6% in 1995 to 18% today.

Despite cloud giants slowing buybacks to fund AI capex, US corporations overall continue buying back shares. Year-to-date, companies have announced $960 billion in buyback authorizations—a record high—led by NVIDIA (NVDA-US), which recently added $80 billion.

Goldman Sachs forecasts total US corporate buybacks in 2026 will reach about $1.3 trillion, sufficient to absorb most equity financing and some lock-up expirations.

However, Goldman warns the real test may not emerge until 2027. At IPO, only a portion of shares are freely tradable; most shares held by founders, employees, and VCs/PEs remain under lock-up, typically for six months.

As lock-up shares from 2026’s large IPOs begin to expire in 2027, the market’s free float could surge—this will be the true test of market resilience.

Still, lock-up expiration doesn’t mean all shareholders will sell immediately. Plus, the IPO market has self-correcting mechanisms: if new listings consistently underperform, future plans will naturally delay or cancel, easing supply pressure.

AI Boom Spreads from Equity to Debt Markets

Capital supply pressure isn’t limited to equities. Goldman Sachs estimates that the five cloud giants—Microsoft (MSFT-US), Alphabet (GOOGL-US), Amazon (AMZN-US), Meta (META-US), and Oracle (ORCL-US)—will spend a combined $5.8 trillion on AI capital expenditures from fiscal 2025 to 2030.

As of July 18, global investment-grade bond markets have seen over $411 billion in AI-related financing, with leveraged finance issuance exceeding $77 billion. In some markets, AI-related debt accounts for over 15% of total issuance this year.

The five cloud giants have issued $194 billion in investment-grade bonds this year, far exceeding last year’s full-year $108 billion. About one-third were issued in non-dollar markets—euro, pound, Swiss franc, Canadian dollar, and yen. Tech’s share of total USD investment-grade bond supply this year has also hit a record 20%.

Goldman estimates that even if the five cloud firms raise their leverage to the highest levels seen among US