June 2026
Market Update
AI is Changing the Nature of US Capital Markets
(3 min read)
16th June 2026
Last week Elon Musk’s SpaceX launched on the US stock market. The Initial Public Offering (IPO) raised $75bn making the company worth $1.8trn. In the first two days of trading the shares have rallied to $192.50 from an issue price of $135, an increase of 42.6%. It will be interesting to see whether this momentum can continue once the restrictions on share sales are removed and more speculative investors potentially book profits.
To put this into some context see Chart 1 below illustrating the size of IPOs over the last 20 years.
Chart 1
Source: Bloomberg
https://parmenion.co.uk/insight-and-resources/news-and-insights/weekly-market-update-the-president-who-cried-peace/
As the year progresses, we are likely to see more issuance in the AI space as the likes of OpenAI and Anthropic come to market with an estimated pipeline worth up to $4trn. In addition, the hyper-scalers are tapping the fixed income market to fund capital expenditure (‘capex’), with Nvidia recently issuing $25bn of bonds, following $170bn so far this year by other ‘Magnificent 7’ and AI companies.
Chart 2 below highlights the heavy skew to AI issuance across capital markets (AI weightings shown in green comparing Investment Grade, Venture Capital and High Yield). This is significant because for more than 10 years markets have enjoyed the powerful tailwinds of share buybacks and dividend payments of $12trn over that period as mega cap stocks had been funding capex out of positive cashflow. While there is still $8-9trn held in money market funds, markets will have to be aware of and discount this major change in the technical drivers.
Chart 2
Source: Goldman Sachs, JP Morgan, Bloomberg, Cruchbase, Apollo Analysts, Apollo Chief Economist
https://www.youtube.com/watch?v=tv5lA7-XZ_w
AI = Artificial Intelligence
IG = Investment Grade Credit
VC = Venture Capital
HY = High Yield
With this change in the supply and demand dynamics, it is likely that the bond market takes the strain, leading to elevated interest rates and bond yields against a background of above target inflation and robust economic growth. Growth in 2026 has been and will continue to be strongly supported by AI spending, an industrial renaissance in semiconductors, pharmaceutical and defence, and Trump’s ‘One Big Beautiful Bill’ which includes lower household taxation and infrastructure spending.
In summary, the outlook remains positive from an underlying fundamental perspective while the ever-increasing demand for capital should weigh on markets.
In terms of portfolio construction and diversification, investing is evolving away from the 60:40 equity bond allocation theme and more towards AI/non-AI exposure.
Peter Geikie-Cobb | Head of Investment Research
Montgomery Associates
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