More than $4trn of market capitalisation is expected to be added to the US market through tech initial public offerings (IPOs) by the end of the year, with big consequences for index investors, experts have warned.
Markets are already concentrated, with the Magnificent Seven in the US and the giant semiconductor stocks in the emerging markets dominating their respective markets.
But there could be more to come as some of the key players in the AI space come to market for the first time.
SpaceX has already started this with a record-breaking IPO earlier this year and more are set to follow, with the listings pipeline for the second half of 2026 including AI giants Anthropic (the owner of Claude) and OpenAI (ChatGPT).
Rebekah McMillan, associate portfolio manager at Neuberger Berman, said these companies could have an estimated $4trn market capitalisation between them based on their initial prices.
“The sheer scale of these offerings is unprecedented and has the potential to deepen investors' benchmark exposure to a narrow set of technology stocks when market concentration is already near historic highs,” she said.
Indeed, AI has pushed the prices of several technology behemoths higher, a phenomenon that David Osfield, manager of the EdenTree Sustainable Global Equity fund, warned has caused markets to “effectively reprice several years of expected future growth in a relatively short period,” leaving limited room for positive surprises.
Less experienced investors are the most vulnerable to this because of the way tracker funds are marketed, according to Simon Adler, head of value equities at Schroders.
“Buying a global or US tracker is often sold as the simplest way for a retail investor to build a diversified equity base,” he said. “But a handful of enormous, AI-linked names now dominate these indices to such an extent that holding one is itself a concentrated bet on a single theme.”
A turning point?
Adler suggested investors worried that we could be near an end point to the cycle should look to history for a guide as to what comes next.
For example, three years after the dot-com bubble peak, the MSCI World index had fallen 45% while value was up over the same period, he noted.
Even if there is still a lot of room to run, he questioned whether such high allocations to one area of the market were sensible.
“Whether you think the AI trade is a bubble or not, ask yourself if it is sensible to have so much of your capital tied to one conviction,” he said.
“Investors must make sure they don't put all their eggs in one basket without realising it. Value strategies offer a way to maintain full equity exposure while avoiding dependence on that single narrative.”
Schroders' value portfolios, meanwhile, currently trade on a cyclically adjusted price-to-earnings ratio of 10x or below, against a global market multiple of roughly three times that. Adler said the gap is wide by historical standards, with overlooked businesses spread across consumer names, construction and beverages.
Osfield agreed on the concentration concern – his EdenTree Sustainable Global Equity fund is currently underweight information technology after taking profits in several strong performers – but his approach remains valuation-disciplined.
The aim, he said, is to be “a core, valuation-sensitive strategy rather than a portfolio that majors heavily on one single theme”.
Taking the opposite view, Michael Walsh, solutions strategist and portfolio manager at T. Rowe Price, has reduced value exposure as 2026 progressed and added US large-cap growth names on the grounds of stronger AI leverage, better resilience to higher energy prices and a clearer earnings outlook.
His firm's house view is style-agnostic and cycle-driven: “Strategically allocating to both growth and value-focused building blocks ensures a diversification of exposure and manager views and offers the best opportunity for alpha generation across the investment cycle.”
Rotating toward AI names was, by that logic, the rational response to the signals on offer – not a capitulation to benchmark pressure.
Not all saw such a binary choice. For Neuberger Berman’s McMillan, the value case is not necessarily a bet against AI.
The infrastructure build-out spans data centres, power grids and industrial capacity, and the capex flows into energy, materials and utilities – value-heavy sectors that stand to benefit directly from the same investment wave driving AI stocks higher.
“We expect the AI trade to evolve and rotate, potentially rewarding portfolios that pair structural AI exposure with real-economy value sectors geared to rates, infrastructure spending, energy intensity and industrial investment,” she said.