Despite the press emphasis on SpaceX coming to public markets this year and the other mega-cap IPOs on the horizon, the impact of these companies is somewhat overstated, according to recent MSCI research.
SpaceX is set to declare its first set of quarterly results as a public company tonight, leaving all eyes on Elon Musk’s space tech company to see if it delivers on lofty expectations.
However, according to MSCI’s Investment Trends in Focus survey, Mega-cap IPOs are only modest contributors to the market.
“Many clients have asked what these listings will do to the indexes their portfolios track,” the report said. “The answer is less dramatic than news coverage would lead you to believe,” according to Ashley Lester, chief research and development officer and author of the report.
Part of this, the research said, is because when companies move from private to public markets, only a fraction of their shares are free-floated.
That said, the report noted that SpaceX, as well as other mega-cap IPOs, is arriving at “twin peaks,” or near the top of the market in terms of both size and valuation. Over the past 50 years, “twin peak” stocks trailed the broad market by 20% in the US and 30% in other developed markets over the next five years from their listing, according to the report.
“Time will tell whether much of the upside investors are paying for has already been embedded in the price,” Lester said. At the time of writing, SpaceX has a share price of roughly $114, a 28.8% fall from its initial listing price, and well below the $200 it peaked at.
See also :SpaceX: Should investors believe the hype?
More broadly, the first half of the year was defined by AI, according to Lester, even despite concerns over geopolitics.
“The world’s top-performing market through late July is Korea, driven by memory manufacturers Samsung and SK Hynix,” the report noted. “The best-performing developed market is the Netherlands, driven by lithographer ASML, and the best-performing industry is semiconductors.”
However, performance was even narrower than these headlines would suggest, according to MSCI. Earnings were mostly driven by a handful of high-beta and momentum stocks, with the influence of analyst estimates and company fundamentals flat or even negative in essentially all markets.
“The first half of 2026 settled, decisively, a question we posed at the start of the year around what would drive markets: Geopolitics lost to AI.
“The less comforting detail is that those earnings came from a handful of leaders in semiconductors and AI infrastructure, not the broad field that usually carries a rally.”
However, Lester noted that this is creating concerns for the second half of the year.
“MSCI’s forward ERP (equity risk premium) for the U.S. has compressed to its lowest level since the dot-com era, far below its long-run average of around 4%,” the report said. “A premium this thin means U.S. equity prices are high relative to the future cash flows that support them.”
The only comparable episode in recent history, the report noted, was the run-up to the dotcom bubble.
“A low premium is not a timing signal, but it does signal that the expected compensation for holding equities is small by historical standards, and that the market has little cushion if earnings growth disappoints or real rates climb further.”
This leaves concerns for the second half of the year, the report said, with the potential for renewed geopolitical conflict to push yields up and any stumbles in AI earnings likely to remove the equity growth that has so far offset higher rates.
“The AI theme to watch in the second half of 2026 may be less about a sudden IPO weight shock and more about exposures already held in public portfolios,” the report said.
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