SpaceX, OpenAI, and Anthropic’s “super IPOs” are piling up; Bank of America: This is a repeat of the super bubble.

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The concentration of technology stocks is approaching the historical bubble threshold, and a wave of giant IPOs is pushing the market toward an even more dangerous edge.

Bank of America strategist Michael Hartnett warned in his latest report that once super IPOs like SpaceX and OpenAI debut, the weighting of technology stocks in the stock benchmark index will easily exceed about 48%, surpassing the concentration levels during all major historical bubble periods, including the "Roaring Twenties", the 1970s "Nifty Fifty", the 1980s Japan Bubble, and the 1990s Dot-com Bubble.

Currently, the technology sector makes up over 44% of the S&P 500 Index. Hartnett bluntly described the current market condition: "Strong price action, retail mania, subdued volatility... bubble vibes are intense."

This warning comes at a time when market sentiment is in an extremely optimistic range. According to Bloomberg, a Bank of America fund manager survey earlier this week showed that investors increased their equities holdings this month by a record amount, prompting Hartnett to reiterate his view that the stock market faces a correction risk. He wrote in the report, "Consensus on positioning and profit forecasts is extremely bullish, and together with the upward breakout in yields, it means now is the time for moderate profit-taking."

Super IPOs aggravate tech concentration risk

SpaceX, under Musk, has announced plans for the world's largest IPO, while OpenAI, developer of ChatGPT, is aiming to go public ahead of rival Anthropic. These mega-deals will further fuel optimism in the market around technology and artificial intelligence, a sentiment that is driving the S&P 500 toward one of its most concentrated rallies in decades.

Hartnett points out that once these super IPOs are combined with existing AI giants, market concentration will easily surpass the historic bubble peak of around 48%. This poses direct pressure on asset allocators—bound by risk management constraints, many institutional investors cannot fully track this weighting in their portfolios and must passively bear the risk of growing tracking error.

Additionally, the index’s excessive tilt toward technology could mask structural vulnerabilities within the broader market. Sectors more closely tied to the real economy, such as consumer and financials, may have underlying weakness overshadowed by the strength of tech stocks, distorting overall market risk assessments.

Lessons from historic large IPOs

Hartnett reviewed several major IPO cases, reaching a highly cautionary conclusion. The listings of Saudi Aramco and Meta (formerly Facebook) later proved to have limited impact on broad market performance; but in some cases with clear "top characteristics", such as the IPOs of Visa and AIA Group, the overall market performed worse in the 9 to 12 months following their debut.

This historical pattern indicates that super IPOs themselves may not directly trigger a market crash but often coincide with short-term market tops, providing valuable timing references.

Bond yields are the key variable ending bubbles

Hartnett specifically notes that surges in bond yields are the common path by which booms and bubbles come to an end. He uses two State Street ETFs as dual indicators for observing the impact of yields on the stock market: if the biotech ETF falls to $120, it signals the sustained impact of rising bond yields is taking hold; if the retail ETF rises to $85, it indicates bond market shocks are temporarily delayed.

On policy, Hartnett expects that substantial policy tightening will not arrive until CPI rises to 4%–5% in the next few months. He also points out that before historic IPOs land, market participants will not easily cut long positions—which partly explains the resilience of current extreme optimism, and also means potential correction risks are accumulating rather than being released.

Notably, Hartnett previously accurately predicted the relative strength of the global stock market last year, and his bullish call on commodities has also been validated, giving his current warnings heightened market attention.

Risk warnings and disclaimerThe market has risks; invest with caution. This article does not constitute personal investment advice and does not take into account an individual user's specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investments made based on this article are at your own risk. ```