Goldman Sachs Research Report Analysis: IPO Fundraising Scale Breaks Record, Three Experts Believe Market Alarm Has Not Yet Sounded

By: Rita

TechFlow Guide

U.S. IPO market fundraising in 2026 has exceeded $125 billion, breaking the full-year record set in 2021. The market is worried about two things. Is this a warning signal of the late cycle? Can the market digest so many new stocks?

Goldman Sachs invited three experts: its own Chief U.S. Equity Strategist Ben Snider, IPO research authority Jay Ritter, and Acadian Fund Manager Owen Lamont. The three have different views. Snider says there is no need to worry too much; late-cycle signals have not yet appeared, and the market's digestion capacity is underestimated. Ritter says high issuance volume does predict low returns, but this signal is only slightly better than random. Lamont says the issuance wave is one of the Four Horsemen of bubbles, but it may mean the bubble is just beginning, far from ending.

The consensus among the three is that the number of IPOs is far lower than during historical bubble periods, first-day gains are not out of control, and true danger signals have not yet lit up.

Record IPO Amounts, but Moderate Quantity

U.S. IPO fundraising so far in 2026 is about $125 billion, exceeding the full-year record of $120 billion in 2021. Goldman Sachs expects the full year to exceed $200 billion.

But there are structural issues behind the numbers. The record-high fundraising mainly relies on IPOs from a few super-large tech companies; individual size contributed the main increment, while the number of IPOs is actually not large. So far in 2026, only about 60 companies have listed, slightly higher than the level in the same period of 2021, but far lower than the annual total of about 400 in 1999 and about 250 in 2021. Goldman Sachs' IPO barometer shows the current environment is just normalizing, not yet booming.

Private equity and venture capital have accumulated about $4 trillion in unrealized value and are accelerating exits after the IPO window reopened. The AI theme has driven unusually large-scale transactions; AI infrastructure requires huge financing, including both IPOs and follow-on offerings and bond issuances by existing companies.

Three People, Three Judgments

Ben Snider is Goldman Sachs' Chief U.S. Equity Strategist, and he believes there is no need to worry too much.

Snider believes the late-cycle warning signals the market worries about are not obvious today. IPO activity is rising but not extreme; IPO valuations are only slightly above historical averages, far lower than during previous bubble periods. Total equity supply in 2026 accounts for only about 1% of the Russell 3000 market cap, flat with the 2015-2019 average, lower than 1.5% in 2021 and 2% during the internet bubble.

The demand side is equally healthy. S&P 500 buybacks grew 4% year-over-year in the first quarter, and strategic M&A announcements increased 100% year-over-year. The household sector has transformed from net sellers during the internet bubble to net buyers in recent years, with funds flowing in through ETFs and mutual funds. Foreign investor shareholding has risen from 6% in 1995 to 18% currently.

Although ultra-large enterprises have slowed buybacks due to AI capital expenditures, AI beneficiaries such as banks and semiconductors are still expanding buybacks. Nvidia recently added an $80 billion buyback authorization, and full-year buyback announcements have reached a record $960 billion. Goldman Sachs expects total buybacks in 2026 to be about $1.3 trillion, enough to offset new supply from IPOs and lock-up expirations.

Snider believes that IPOs have a self-regulating mechanism; IPOs will continue only when demand is sufficient. If the market cannot digest the supply, it will naturally limit future issuances.

Jay Ritter is the Director of the IPO Research Center at the University of Florida, and he believes there are signals, but they are weak.

Ritter points out that high issuance volume does predict lower future market returns, but the prediction accuracy is only slightly better than random, about 52%. Relying on IPOs to judge market turning points is unreliable; after Greenspan said "irrational exuberance" in 1996, the market rose for another 3.5 years.

Regarding IPO performance, Ritter's long-term research shows that excluding first-day gains, IPOs underperform the market on average over three years after listing. But he emphasizes several exceptions. The technology sector is the best-performing sector in the IPO market; companies with annual revenue over $100 million can basically keep up with the market, and technology companies with dual-class share structures actually outperform. This structure allows issuing a large amount of low-voting-rights stock to incentivize employees, while founders maintain control through high-voting-rights stock, giving management a strong motivation to focus on the stock price.

Owen Lamont is Senior Vice President and Portfolio Manager at Acadian Asset Management, and he believes the issuance wave is one of the Four Horsemen of bubbles.

Lamont is the most cautious. He views large-scale equity issuance as one of the four major signs of market bubbles, believing companies are smart; they tend to issue stock when share prices are overvalued. This signal was effective in 2021, when the massive issuance of SPACs and IPOs was a good time to reduce U.S. equity allocation.

But he also emphasizes that an issuance wave does not necessarily mean the market is immediately peaking. The IPO wave of the 1990s lasted for several years, as did the asset bubble in Japan in the late 1980s. So an issuance wave may mean the bubble is just beginning, far from ending.

Lamont points out that he is more concerned with first-day gains. If first-day gains far exceed the normal 15% to 20%, entering the 100% or even higher range, as was common in 1999, that is a clear signal of speculative frenzy. Currently, except for a few exceptions, first-day gains are not extreme.

Regarding IPO investment, Lamont has a vivid analogy. IPOs are like bananas; they need to ripen before eating. Waiting 1 to 3 years after listing before buying is a better strategy. He also warns that if debt issuance waves and equity issuance waves appear simultaneously, that is a clearer negative signal, indicating that the entire corporate value may be overvalued.

Global Perspective: Different Stories in Europe and Hong Kong

The situation in Europe is different from the U.S. Goldman Sachs Global Strategists Peter Oppenheimer and Guillaume Jaisson point out that European equity financing exceeded €200 billion in the past 12 months, but accounts for only 1.7% of market cap, slightly higher than the long-term average of 1.4%. After deducting buybacks and redemptions, net supply remains slightly negative. Europe's real problem has nothing to do with issuance size; the core contradiction is insufficient domestic capital inflow. There were only about 40 IPOs in the past year, far lower than the normal level of about 100. This will self-reinforce; domestic investors flow out of the local market due to the scarcity of growth stocks, and growth companies choose other listing locations to obtain deeper capital pools.

The situation in Hong Kong is more positive. Hong Kong's IPO market recovered strongly in 2025, with 119 companies listing and raising $37 billion; in the first half of 2026, 84 companies have already raised $27 billion, with the full year expected to reach $60 billion. Average returns three months after IPO are about 60%, with a median of about 20%, performing far better than previous years. Goldman Sachs China Strategist Si Fu expects about $110 billion in equity supply in the Hong Kong market in 2026, including $60 billion in new H-share IPOs and $50 billion in secondary financing, which will be easily absorbed by multi-channel demand exceeding $400 billion, coming from corporate dividends, southbound capital, and global capital reallocation.

TechFlow Perspective

The most interesting part of this Top of Mind is the different interpretations of the same set of data by the three interviewees. Snider sees record IPO amounts but moderate quantity, concluding normalization. Lamont sees the same data, concluding a wave may be forming. There is no right or wrong between the two views, only different time dimensions. Snider looks at current supply and demand balance, Lamont looks at historical patterns. Both judgments can hold true simultaneously; normalization now, possibly becoming a bubble in two or three years.

Ritter's view provides another dimension. IPOs underperforming the market early is a 60-year rule, but there are exceptions: technology sector, large revenue companies, dual-class equity. These exceptions precisely show that indiscriminately shorting IPOs might miss the real winners. When Nvidia listed in 1999 with a $600 million valuation, it was also part of the high-valuation tech IPOs.

Internal views at Goldman Sachs are also worth noting. Snider as a strategist is optimistic, Oppenheimer as a strategist focuses on Europe's structural disadvantages, Lynam as a credit strategist warns of debt market saturation. The difference in perspectives among different functions within the same institution is more worth reading than any single conclusion.

Disclaimer

This article is a compilation and interpretation by TechFlow Research of a third-party broker research report (Goldman Sachs, July 20, 2026). The ratings, target prices, earnings forecasts, and related judgments cited in the text are the views of the broker's analysts, representing only their institution's position, not representing the views of TechFlow Research, nor constituting any investment advice.

The market has risks, decisions must be independent. This article should not be used as a basis for buying or selling any securities.