- Jefferies' Wood sees SpaceX IPO as a potential peak of AI market euphoria
- Google's record $84.75 billion secondary offering may signal peak investor enthusiasm
- Liquidity risks rise as new IPOs could drain funds from existing AI-related stocks
The highly anticipated listing of Elon Musk's SpaceX is set to hit the Nasdaq on June 12, and Christopher Wood, global equity strategist at Jefferies, thinks it might signal the absolute top of the AI-driven bull run. In his weekly Greed & fear note, Wood has pointed to the upcoming IPOs of SpaceX, Anthropic, and OpenAI as likely turning points for a market riding high on artificial intelligence optimism.
SpaceX is planning to sell 555.6 million shares at a fixed $135 each. This will raise $75 billion and value the company at $1.77 trillion. The actual free float is a mere 4.2% of the company, but for Nasdaq-100 index weighting calculations, it will be treated as having a 12.7% float. Wood noted this rule change is completely unprecedented.
"Such 'fast tracking' of new listings into indices has never happened before in America," he wrote. The bottom line is that passive funds will be forced to buy the stock up to the relevant weighting in the index, creating an artificial demand that such a thin float could never generate on its own.
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Wood didn't mince words about what the timing suggests. "The pending IPOs, with Elon Musk and SpaceX from a timing perspective smartly leading the way, raise the obvious question whether this marks the peak of Al euphoria," he wrote. "It could well do."
But valuations aren't his only concern. Wood highlighted Google's massive $84.75 billion secondary offering, which is a record for this kind of financing. He views it as a strategic move to tap the market before these three giant IPOs arrive, serving as another potential sign of peak euphoria. Additionally, a Jefferies estimate mentioned in the note suggests about 60% of announced US data center projects risk never being finished due to power shortages, permitting delays, and execution hurdles.
Public sentiment is also taking a hit. Social Capital CEO Chamath Palihapitiya recently noted that registered American voters now view AI more negatively than the US Immigration and Customs Enforcement. That comparison shows just how fast public disillusionment is spreading.
For investors already heavily in AI-linked stocks, Wood's most pressing warning is about liquidity. He argues these massive incoming IPOs will suck liquidity away from the very stocks that have seen the most inflows lately, specifically the hyperscalers and hardware suppliers fueling the AI boom. Given the self-reinforcing dynamics of passive investing, those stocks are arguably the most vulnerable when the trend shifts.
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