SpaceX, OpenAI, and Anthropic IPOs: AI's Reckoning

**Josh** (0:00)
Three of the largest IPOs in history are filing within weeks of each other. We have SpaceX, OpenAI, and as of just this week, Anthropic. And on that same day, Google raised $80 billion of outside capital to fund its own AI buildout. Now, the interesting part here is they're partly funded by each other's money. Everyone is contributing to the other person's balance sheets, and we've even gone so far as in the last few weeks to change the rules protecting passive investors about how they can invest in IPOs. The biggest buildout in the history of capitalism is currently happening, and we have to ask the question, is there enough money? Like clearly there's a reason, there's correlation as to why each one of these companies are choosing to go public all around the same time. And this chart that we're sharing on screen here is pretty incredible. I mean, between OpenAI, Anthropic and SpaceX, the total amount raised during IPOs is going to be $180 billion.
That's more than the entire.com bubble combined at $164 billion. That's three years versus three IPOs. So the scale of this is huge. And I mean, we have to answer a few questions. Is this a circular economy moment? Are they running out of money? Have they outgrown private capital? There's a lot to talk about here, Ijaz, I guess starting with SpaceX.

**Ejaaz** (1:11)
Yeah. So you've got SpaceX, OpenAI, and Anthropic, they're having blockbuster IPOs. But the story isn't really about each of them individually. It's the fact that they're all happening potentially within weeks of each other. They're all targeting by latest a Q4 IPO, and the combined raise is absolutely massive. We haven't seen anything like this before. So if we break down what we've seen so far, we had SpaceX, I think it was April 1st that filed for their S1, which basically is their proclamation that they intend to IPO. I think they're targeting around an IPO sometime either this month or at least early July. That's what the rumors are saying right now.
And then 10 days ago, we had OpenAI reportedly confidentially file their own S1 for their own IPO. And then 10 days later, aka yesterday, Anthropic filed for their confidential S1, which means that now all three of these companies are going for blockbuster IPOs within potentially weeks of each other. And so it begs the question, why is this happening now? Why such a rush? The answer to me is pretty simple. The AI CapEx buildout is becoming costlier than any of these companies could have expected, and they've decided to lean in. They've run out of free cash flow. Up until this point, all of these companies have spent private money, money that they've raised from investors or earned themselves through revenue. And now they're turning to the public and saying, we need more money to build out more data centers and GPUs so that we can train these models and facilitate all the demand that we're seeing. Now, if you talk to each of these companies, none of them say that there is no demand on their side. Google and I believe Amazon, Microsoft, and Meta have all reported profitable quarters through all their AI capex expenditure. I think combined actually those four companies were aiming to spend around $1 trillion this year, but it's not enough and so they need more money to fund all of this thing.
The criticism that comes to me is like, I don't know whether this is the point of no return. We were chatting about this before we started recording, where there's no going back after this. We are jumping into the abyss, and whether we're going to lever up through debt instruments or whatever that might be, there is no returning from this. It is all in or nothing.

**Josh** (3:24)
Well, the thing I find most interesting is it's not just the companies that are going all in, it's the institutions and it's the public, and it is pretty much everyone who's going all in, so much so that the largest funds on Wall Street that actually host these IPOs are changing the rules just to accommodate them. This most recent one happened around the SpaceX IPO, where index providers, they waived their profitability requirements and cut the seasoning window from 90 days to 5 Basically, what that means is a company needed to prove that it was a viable company that could be traded publicly before index funds were required to buy it. Now, those index funds can buy it a lot sooner, so a lot of people who might not want to be investing in SpaceX, their retirement funds, their 401ks, the indexes that hold it, are going to be able to invest a lot faster than they normally otherwise would have been.