HSBC Asset Management examines whether the resurgence in mega-cap IPOs reflects stronger fundamentals than previous technology booms or another period of excessive optimism. The paper argues that today’s AI leaders are backed by record profitability, but elevated valuations, speculative behavior, and rising equity issuance suggest investors should remain selective.
Mega Cap IPOs Are Here
HSBC Asset Management
Research
7 Pages
Key Takeaways
Profits far stronger: U.S. tech net profit margins are nearly 27%, about 2x the 2000 peak and 3x the long-run global technology average of 11%.
Capex keeps climbing: Four U.S. hyperscalers expect nearly $800 billion of 2026 capital spending, roughly 80% above the prior year.
IPO returns disappoint: Traditional IPOs gained 76% in 2020, but 480 IPOs issued between July 2020 and December 2021 generated negative average returns from their offering prices.
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