Markets Update May 2026 - Mega IPOs Cast Their Shadow

The overall upward trend in global stock markets remains intact, though momentum is likely to slow soon. The very strong earnings season for the first quarter of 2026 has been a key driver for the markets in recent weeks. However, these positive factors are now largely priced in, as evidenced by high valuations and overbought conditions.

In addition, the Iran conflict and the associated blockade of the Strait of Hormuz are becoming a drag on the market. Investors are increasingly losing patience and beginning to price in inflation risks more heavily, leading to higher interest rates. Looking ahead, this acts as a brake on the highly valued markets.

The fact that the Hormuz blockade has recently been eased somewhat—Chinese and Indian ships are now allowed to pass through the strait—along with the ongoing release of strategic oil reserves, has prevented an even more severe inflation shock. However, this is not a sustainable long-term solution. For inflationary pressure to ease permanently, a diplomatic resolution to the Iran conflict in the coming months remains essential. Whether the current negotiations will lead to a lasting opening of the Strait of Hormuz that extends beyond the discussed 60 days is highly uncertain.

Companies Valued at Up to $4 Trillion Set for IPOs

The technology and aerospace company SpaceX is on the verge of its stock market debut. At the same time, the AI company OpenAI has moved up its plans for an IPO (Initial Public Offering). This is likely to put pressure on its main rival, Anthropic, to also pursue an IPO in the near future. The companies mentioned alone could be valued at a total of up to $4 trillion. This suggests a “hot” IPO summer is on the horizon.

The investment banks handling these transactions stand to reap enormous revenues. But will investors also benefit? The parallels to the tech euphoria of the late 1990s are undeniable: A new technology dominates the stock market narrative, sentiment is euphoric, and companies are using the environment to raise capital on the market at ambitious valuations. The valuations currently under discussion often imply high double-digit price-to-sales ratios. In the case of SpaceX, a listing at the upper end of the valuation range could even result in a triple-digit price-to-sales ratio. Note: We are talking about price-to-sales ratios, not price-to-earnings ratios, as many of these companies have not yet generated sustainable profits. 

In the late 1990s, the mega-IPOs of that era proved to be harbingers of the bursting of the dot-com bubble and a subsequent bear market that lasted for years. Is history in danger of repeating itself? That is by no means certain. If the upcoming IPOs do indeed proceed at the valuations currently being discussed, these companies face the risk of disappointing returns in the medium term. Given their potentially enormous market capitalization, corresponding price corrections could also temporarily weigh on the entire technology sector. However, a multi-year bear market in technology stocks—and thus a repeat of the dot-com scenario—is currently less likely. This is because the technology sector’s revenues, profits, and cash flows are significantly more robust overall today. That is the key difference from the dot-com era around the turn of the millennium.