In recent years, the S&P 500 has been powered by some of its biggest names. But they could face big challenges in the next 12 months.
A wave of high-profile companies are about to hit the stock market. And they could have serious implications for existing stocks.
IPOs
SpaceX, OpenAI, and Anthropic are gearing up for initial public offerings (IPOs). And these could be some of the largest in history.
SpaceX is looking for a valuation of $1.75trn. OpenAI is looking for $1trn, and Anthropic is aiming for $500bn. Those are big numbers. And they come with correspondingly big implications for the stock market.
Ordinarily, none of these stocks would be eligible to join an index straight away. But Nasdaq is changing its entry requirements. Under the new rules, the new stocks could join the Nasdaq 100 within 15 days. And that could have big implications.
Their inclusion would shake up the index in a big way. Importantly, it could cause some big names to fall sharply.
Index inclusion
SpaceX, OpenAI, and Anthropic are targeting $3.25trn in total market value. This will make them a big part of the Nasdaq 100.
As a result, funds that track the index are going to have to buy a lot of shares. That should be good for their share prices.
The new names joining, however, means existing ones will make up less of the overall index. So they’ll get sold as a result. A lot of these are also the biggest names in the S&P 500. And to balance their portfolios, funds will need to sell these.
That’s will create downward pressure on their share prices. But it won’t be because of anything going wrong with the businesses. It’s just the supply and demand dynamics of the stock market. For long-term investors, though, this could be a huge opportunity.
Microsoft
Microsoft (NASDAQ:MSFT) shares are down 22% this year. The firm is dealing with a threat on two fronts from artificial intelligence (AI).
The first is the threat of software disruption. The concern is that its enterprise software might be less valuable in a world of AI agents.
The second is the risk of overinvesting. The company has announced big spending plans for 2026 and those aren’t guaranteed to pay off.
My own view is that the falling share price is an opportunity. And I’ve been buying the stock for my portfolio as a result.
Microsoft shares are already at some unusually low multiples. But for those who aren’t convinced, a better opportunity might be on the way. The share price falling due to index rebalancing has nothing to do with disruption. And it’s going to be hard for investors to ignore.
Once-in-a-lifetime opportunity
Falling share prices can present buying opportunities. But there are usually associated business risks to think about. Sometimes, though, that isn’t the case. It’s extremely unusual, but this might be exactly what’s on the way later this year.
SpaceX, OpenAI, and Anthropic joining the stock market is a once-in-a-lifetime event. And it could result in a major Nasdaq reshuffle.
In that situation, investors will want to be ready. I’ll certaintly be paying close attention as the situation develops.
