The US IPO market has reopened emphatically in 2026, with dollar issuance already at a record high. For investors and advisors attuned to cycle risk, that fact alone is enough to generate anxiety. History offers uncomfortable precedent: elevated IPO activity has often preceded market downturns. Goldman Sachs' Allison Nathan gathered three long-time watchers of IPO cycles to stress-test that concern1. Their verdict: the alarm may be premature, but it is not entirely without merit.
A Record Year That Isn't Quite a Boom
The distinction between record issuance and an IPO wave is not semantic. Jay Ritter, Director of The IPO Initiative at the University of Florida, draws it plainly: "The total amount of proceeds raised this year is setting a record. But the number of companies going public has been still fairly modest." Context matters. Since the internet bubble burst, operating company IPOs have averaged just over 100 per year, compared with over 300 in the 1980s and 1990s. Ben Snider, Goldman Sachs' Chief US Equity Strategist, reinforces the point: in dollar terms, new issuance has totaled around $125bn year to date, surpassing the prior full-year record of roughly $120bn in 2021, but roughly 60 US companies have gone public so far this year, a figure much closer to the long-term average than to past boom levels.
Owen Lamont, Senior Vice President and Portfolio Manager at Acadian Asset Management, agrees: "In the past three years we have been in the opposite of an IPO wave. We have been in an IPO drought." He calibrates the threshold carefully: "If there's not an IPO happening every business day, you're probably not in a wave." By deal count, that threshold remains unmet. By dollar volume, the record owes to a small number of very large transactions. The 2019 Saudi Aramco IPO is the instructive analog: "The largest IPO that happened in 2019 was an idiosyncratic event, not really reflecting anything about world capital markets."
Two structural forces, Ritter argues, have permanently suppressed deal count since the dot-com era. The first is the vast expansion of private capital, which has kept hundreds of unicorns private year after year. The second is the winner-take-all economics of the technology industry, which makes trade sales increasingly rational exits for venture-backed companies. The IPO market has not collapsed. It has structurally contracted.
Is This a Red Flag?
The honest answer is: conditionally. Ritter acknowledges the historical signal but refuses to overweight it: "There is evidence that high new issue volume is a predictor of low future market returns. But like most indicators, it works about 52% of the time." That margin above random chance is real but narrow.
Lamont is notably more cautious. He views a full issuance wave as one of the "four horsemen" of a market bubble, a signal that firms, who are smart capital allocators, are choosing to sell equity when they believe it is overpriced. "If there is a wave of issuance, again, it hasn't happened yet, but if there is a wave of issuance, that would be a symptom to me that the market is overvalued and we're in a bubble." The critical qualifier is timing: "IPO waves don't necessarily signal the market top. It may be a signal that gets you out too early."
Two counterweights deserve emphasis. First, first-day IPO pops, historically a reliable thermometer for speculative fever, remain subdued. In past bubbles, pops of 100% were not unusual. Today's modest first-day returns suggest, in Lamont's words, that "we are not in a speculative euphoria." Second, the AI investment thesis provides a legitimate, non-valuation rationale for capital-raising at scale. "Companies undoubtedly need capital to invest in it, and raising money to fund good projects is a healthy and vital part of capitalism," Lamont concedes. The caution is what history rhymes: "Historically, it's always been the case we've had fantastic new technology. The internet was a fantastic new technology in 1999. That doesn't mean it would have been a great idea to buy Pets.com."
Can the Market Digest the Supply?
The supply-demand question may be more tractable than headline figures imply. Ritter views digestion concerns as overblown: "US capital markets are big. The ability to absorb big IPOs is enormous." His framework is arithmetic: US companies have been paying out roughly $600bn in dividends and repurchasing approximately $1 trillion in stock annually, producing $1.6 trillion in capital that must be recycled each year. IPO supply, even at record dollar volumes, absorbs only a fraction of that flow.
Lamont accepts the supply-demand logic but resists false precision about where the price-breaking threshold lies. In the late 1990s, technology company share counts rose 3 to 5 percent annually for several years before prices finally broke. "We're crossing the river by feeling the stones," he says, invoking Deng Xiaoping's description of China's gradual economic reforms. Firms will keep issuing until demand signals through lower prices.
The debt dimension adds a layer. Firms have issued substantial AI-related debt while simultaneously repurchasing equity, a pattern Lamont interprets as a positive equity signal: the market is pricing debt rich relative to equity. But the combination of a full debt issuance wave and a full equity issuance wave would change that read entirely. "Then I would just say we have a pattern of external finance... And that tells me that the whole enterprise value of the company, both the debt and the equity, are possibly overpriced."
How Should Investors Navigate IPOs?
Historical underperformance of IPOs in the first three years is one of the most durable findings in financial economics. Lamont is direct: "IPOs are like bananas. They need to ripen before they're ready to eat." Buying at the offer price captures the average first-day pop and can make sense, but post-listing purchases carry elevated risk, especially during waves when unprofitable companies cluster.
Ritter offers a useful refinement: the underperformance pattern is not uniform. Companies with at least $100 million in annual revenue have broadly matched the broader market after the first day. Technology IPOs have outperformed non-technology. And within tech, profitability at the time of listing is not a reliable predictor of long-run returns. The general rule has exceptions, and the current IPO cohort skews toward larger, more mature businesses than past waves.
5 Key Takeaways for Advisors and Investors
1 Record dollar issuance does not equal an IPO wave. Deal count remains near long-term historical averages. A handful of very large AI-driven transactions is inflating the headline figure. The structural decline in deal count reflects the expansion of private capital and winner-take-all technology economics, not temporary suppression that will snap back.
2 Watch first-day pops as the clearest speculative thermometer. Modest first-day returns confirm that euphoria-driven buying is absent today. If first-day pops begin to exceed 30 to 40 percent consistently, that changes the risk assessment materially. It is the single most actionable real-time signal.
3 Debt issuance is a complement to the equity signal, not a substitute for it. AI-related debt issuance paired with ongoing buybacks is currently equity-positive, suggesting the market views equity as underpriced relative to debt. A simultaneous wave of debt and equity issuance would be the more serious warning sign, for both credit and equity markets.
4 Do not buy newly listed IPOs immediately after trading begins. The three-year average underperformance finding is among the most robust in the academic literature. Patient investors who wait one to three years systematically improve their outcomes. If participation in IPOs is a priority, owning a diversified portfolio of new listings rather than concentrating in a single name improves the distribution of outcomes.
5 Monitor the holistic equity supply picture, not just IPO volume. Net equity supply, which accounts for buybacks, acquisitions, and delistings alongside new issuance, is the relevant metric. Net supply remains negative or near-neutral today. If large-cap firms pivot from net repurchasers to net issuers at scale, as some mega-cap technology companies have recently signaled, the supply-demand math shifts in ways that warrant genuine repositioning.
*Sources:
1 Goldman Sachs Exchanges podcast, recorded July 2026. All quotes from Jay Ritter (University of Florida's Warrington College of Business), Owen Lamont (Acadian Asset Management), Ben Snider (Goldman Sachs), and Allison Nathan (Goldman Sachs).*
2 Goldman Sachs Top of Mind Issue 150, "IPO Surge: A Red Flag for Markets?" (July 22, 2026);
