CIBC Global Asset ManagementJun. 26, 2026
5-minute read
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The IPO season of 2026 to 2027 is shaping up to be historic. Companies like SpaceX, OpenAI and Anthropic ― leaders in space exploration and artificial intelligence ― are expected to go public, each possibly valued at over $1 trillion. For context, it took decades for giants like Apple and Microsoft to reach this milestone. This wave of IPOs is turning heads, but there’s a critical question for self-directed investors: How will these mega IPOs impact stock indexes and the ETFs you invest in? To learn more about IPO season and what it means for ETFs, we chatted with the ETF and Global Beta teams at CIBC Global Asset Management.
Glossary
Before we begin, let's explain some terms we use in this article:
Initial Public Offering (IPO): When a private company sells shares to the public for the first time.
Artificial Intelligence (AI): Machines performing tasks that typically require human intelligence, such as learning and problem-solving.
Exchange-traded fund (ETF): A fund that holds a collection of assets and trades on an exchange, like a stock.
Stock index: A list of stocks selected by a data provider to track how the market, or a part of it, is performing. The data provider selects which stocks to include and regularly updates the list. Examples of stock indexes include the S&P 500 and Nasdaq 100.
Index shake-up
The U.S. stock market already has a large weight in technology and AI. This level of AI exposure will increase further with the planned IPOs of SpaceX, OpenAI and Anthropic.
How do you see the mega IPOs shaking up stock indexes?
The arrival of mega IPOs ― such as SpaceX, OpenAI, and Anthropic ― has the potential to reshape major stock indexes in meaningful ways. When a large, high-profile company goes public and is eventually added to an index like the S&P 500 or Nasdaq, it can shift sector weightings and add a new source of volatility. We’ve seen this play out before: when Facebook (now Meta Platforms) joined the S&P 500 in 2013, it quickly became a heavyweight, influencing both the index’s performance and investor flows.
When SpaceX, for example, is to go public at its current valuation, it could instantly become one of the largest index members. These IPOs tend to draw a lot of trading activity, which can temporarily distort index performance. Over time, the presence of new mega-cap companies can reinforce certain sector trends or prompt index providers to rebalance, as happened with Tesla’s addition in 2020. For investors, it’s a reminder that the makeup of these indexes is always evolving, and that new entrants can bring both fresh opportunities and new risks ― especially during periods of rapid innovation.
Supersize me
Index funds are sometimes called "passive" but this may not capture the momentum bias of market-cap weighting. As AI excitement builds in the United States, market-cap weighting means that capital may flow disproportionately into the largest companies, including mega IPOs.
Looking at the capital flowing into the AI trade, how "passive" is an index like the S&P 500 or the Nasdaq?
Although indexes like the S&P 500 and Nasdaq are considered passive, their market cap-weighted methodology means they are highly responsive to capital flows and sector performance. The recent surge in AI-related stocks ― such as Nvidia, Alphabet and Micron ― has resulted in these companies representing a disproportionate share of the indexes. For instance, Nvidia’s rapid rise has made it one of the top holdings in both the S&P 500 and Nasdaq 100, with its market cap now topping Apple and Microsoft. This concentration means that passive investors are, in effect, making a large bet on the AI sector. The same phenomenon occurred during previous market cycles, such as the dot-com boom, when technology stocks dominated index performance. While the indexes themselves do not actively select stocks, although S&P does have discretion, their exposure can shift quickly based on market trends, making them less “passive” than the label suggests. Investors should be mindful that passive investing in these indexes may result in significant exposure to thematic trades like AI, regardless of what investors might intend.
Beyond AI
Investors holding market-cap weighted U.S. or global index ETFs have taken on increasing exposure to the AI trade. While some investors are leaning in to this trade, others are exploring opportunities to diversify.
When it comes to ETFs, what alternatives do investors have to diversify their exposure to the AI trade?
For investors who want to diversify their exposure to the AI trade, there are several equity strategies worth considering. Below are some examples available through ETFs:
Multi-factor strategy. Combines factors like value and profitability to build a portfolio that avoids overconcentration in the market’s biggest weights.
Low-volatility strategy. Focuses on companies with stable earnings and attractive dividends. This can help smooth out returns when technology stocks are volatile.
Equal-weighted strategy. Gives each company the same weight, regardless of market capitalization weighting. An equal-weighted strategy limits the impact of mega-cap names like Microsoft or Nvidia.
Geographic diversification. Provides exposure to countries or regions where AI may have less effect on stock market performance. Examples include Canada or EAFE ― developed markets outside North America.
Thematic or sector focus. Provides exposure to sectors where AI may have less effect on stock market performance. Examples include industrials, financials or energy.
