The 2026 IPO Comeback Takes Shape

By Justin Kotzin
Global Head of Capital Markets

The next phase of the IPO comeback may be defined less by mega-deals themselves than by what follows: a broader opening incorporating mid-cap issuers, underrepresented sectors, and markets beyond this year’s busiest geographies.

The scale of anticipated IPOs this year is historic. With SpaceX’s successful pricing at an $86 billion valuation and a series of jumbo-sized IPOs expected to price in the fall, US volume is likely to surpass the 2021 record of $175 billion.¹ Global pipelines in Hong Kong and India remain healthy as well and point to continued activity after the post-Covid IPO freeze.

Crucially, investor appetite appears strong. Overall, share prices of US IPOs are up 22% on average for the year to date, while companies that went public in Hong Kong are up 96% on average from their initial pricing.² India, after a muted start to the year, is showing signs of regaining momentum as recent aftermarket performance improves.³

What, then, does this flurry of activity mean for mid-cap companies going public as jumbo IPOs raise money at unprecedented levels? We anticipate four key factors will shape capital markets and potentially widen the IPO window over the remainder of the year.

1. Diversification will remain a draw. Though media attention largely focuses on SpaceX and other jumbo IPOs, mid-cap companies are an important source of alpha and allow portfolio managers with a mandate for this asset class to access the IPO market. These growth companies play a key role in new idea generation and often allow institutional investors a way to invest into high growth, secular trends in sectors such as defense, biotech, and energy.
   
   Importantly, many of these companies have remained private for extended periods due to the post-Covid closure of the IPO market, allowing them to build scale and improve governance. From a growth investor’s perspective, a broader IPO reopening would be an important milestone not only for capital formation, but as a marker of a new cycle in which a greater range of companies, sectors, and geographies are represented in public markets. We still think scale will matter – the reopening is likely to favor larger offerings, with $750 million to $1 billion-plus IPOs leading the way over the $250 million deals that defined the prior cycle.
   
   The diversification impulse may also be supported by liquidity generated via positive mega-IPO aftermarket trading performance. Given the sheer magnitude of gains generated by the institutional investor community through SpaceX, we expect to see a more robust IPO calendar over the second half of the year as investors look to redeploy winnings beyond overbought AI, semiconductor, and defense-tech names.
   
   As for the pending mega-IPOs rumored for later in 2026, SpaceX proved that large-cap, AI-fueled hypergrowth assets face no shortage of capital to fund their growth ambitions. Its launch also suggests that modest selling across the Magnificent Seven, crypto, and money market funds should provide ample capital to responsibly allocate to mega-IPOs without exhausting aftermarket buying power.
   
2. A discount at launch will continue to be necessary for order book momentum and a constructive auction process. Successful debuts for small and midsize issuers often require a valuation discount relative to their larger public peers for reasons including lower liquidity, higher perceived risk, and a lack of a public track record. Companies seeking funding are often willing to offer this discount to attract and secure blue chip mutual fund managers, which can represent a steady long-term investor base.
   
   We project that wide IPO discounts will persist for underperforming sectors, or where IPO performance has been limited. As IPOs continue to price and trade well, we expect discounts to narrow in the second half of this year to normalized levels, setting the stage for a potentially constructive IPO market in 2027.
3. Not all sectors have been equally embraced by investors, but we are optimistic interest will broaden. Companies in sectors including AI, AI infrastructure, space tech, energy, defense, biotech, and ‘next-gen’ technology have been welcomed by public markets this year, while those in sectors such as consumer discretionary, software as a service, and healthcare services have either performed poorly or seen relatively limited activity for the year to date.⁴ If recent IPOs continue to deliver strong aftermarket performance, we could see a positive ripple effect as investors broaden their scope and allocate to attractively priced sectors. Improved issuance conditions across underrepresented sectors would likely follow, expanding the IPO window.
4. Volatility remains contained, but tail risks bear watching. At current levels, a moderate volatility uptick is unlikely to close the equity issuance window. Key risks we are watching include geopolitical conflicts, inflation, the direction of interest rates, consumer headwinds, and pockets of euphoric valuation in technology. The VIX, which is Wall Street’s main volatility gauge, is currently trading around 16. That is well below the level of 20, which traditionally signals a choppy market.⁵

The largest risk to an expanding IPO window for mid-cap companies is a high-profile IPO disappointment, which could dampen momentum and prompt a pullback in capital markets. Over the next six months, we will be closely watching aftermarket trading for small and midsize issuers. If these companies remain in favor, we expect that sector rotation will accelerate and broaden investor demand beyond current concentrations and sustain market momentum into 2027.

References
¹ J.P. Morgan IPO Outlook based on latest ECM perspectives – May 2026. For IPOs >$50M, exclude SPACs.
² Dealogic, CapIQ as of June 15. 2026. For IPOs >$75M.
³ Dealogic, CapIQ as of June 15. 2026. For IPOs >$75M.
⁴ MarketWatch, citing FactSet data, on June 2026 underperformance in health care and consumer discretionary; Barron’s on the software selloff and AI-related pressure on traditional SaaS models.
⁵ S&P Global, “A Practitioner’s Guide to Reading VIX,” December, 2017

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