Since OpenAI’s ChatGPT was unleashed over three years ago, most investors have focused on pickaxe plays to invest in the boom: chipmakers like Nvidia, the fabs like TSMC, and companies that build compute equipment like ASML, just to name a few. Then, simultaneously, there was investment from the companies taking on the hefty price of data center buildout: Microsoft, Google parent Alphabet, and Oracle, among others.
This trend of investment has continued to permeate outward to every pocket of the AI economy. In recent months, it has reached producers of memory, like domestic producers Western Digital, Micron Technology, and Seagate. There are also South Korean giants SK Hynix and Samsung, huge players in the memory game.
But later this year, for the first time, investors will get a bid/ask on the companies taking advantage of all of this new hardware: the AI labs themselves. Sure, we’ve long had investing access to Google parent Alphabet, the creator of Gemini. But the rising crop of big tech has the makings of something altogether different. It could also represent a hazard to America’s largely passive wealth machine, which contains trillions of dollars of our money.
The threat of new technology
Today, Wall Street offers investors limited ways to gain direct exposure to the actual models that should be facilitating this technological revolution. And ultimately, it might be for the best. While the models are technically impressive, it’s no secret that they are money pits.
Research from The Information shows that OpenAI had a net cash burn of $8.5 billion in 2025, despite achieving a milestone $20 billion in annual recurring revenue. Anthropic burnt $5.2 billion on its way to $9 billion ARR. Elon Musk‘s Xai, embracing the most aggressive AI strategy, burned over $10 billion last year to achieve less than half a billion in ARR; it was acquired by SpaceX in some imaginative dealmaking to shore up its hefty losses.
Here, the growth from various AI labs is astronomical, so too are the losses and valuations. They are exhausting every resource that they can to extend their cash runway until they can make AI models more affordable or efficient — or justify the value of increasing token costs.
After these three firms raised over $277 billion and pumped their valuations to equally alarming levels that don’t necessarily reflect their current financial health, we arrive at the next natural step: the public markets.
The $2 trillion problem that could affect your retirement
In recent weeks, all three of the aforementioned AI labs have ramped up IPO talks. They are all now looking to hit the markets this year, bringing their unreal valuations with them.
OpenAI’s $730 billion post-money valuation, Anthropic’s $380 billion valuation, and a newly merged SpaceX-Xai valued at over $1.75 trillion will make them among the biggest private companies to debut on public markets. And despite that, none of them are profitable. None of them expects to be profitable for several years.
Perhaps that is not worrisome in itself, but it is if these unprofitable companies land in your portfolio at their extremely advanced valuations. You might not necessarily be the buyer, either.
Buried under the deluge of headlines, Elon Musk’s SpaceX reportedly asked to be fast-tracked into “major stock indexes” such as the S&P 500 and Nasdaq 100 ahead of its forthcoming IPO. And while the indexes don’t have anything like that — in fact, they both have different eligibility requirements — there is a world where other market-cap-weighted indexes could be made to absorb the more than $2 trillion of listings.
That’s a lot of weight to put on. And if indexes like say, the S&P Total Market Index or MSCI indexes (which do have fast-track options) do actually add these new listings, then suddenly, your boring, passive index fund won’t be so boring anymore.
Instead, it’ll be the exit liquidity for the AI opportunists who fed billions to the new tech boom — allowing them to ride something stronger than fundamentals. That is, they will be able to sell, supported by the tall tales they’ve spun about solving “the last great problem.”
Only, fundamentally, it’s just a story. And like all stories, it’s open to interpretation, or worse, repricing. If, for any reason, as we have seen in recent weeks with some Big Tech companies as they spend even more on capital expenditures (capex), AI were to fall out of favor, Americans could be dragged into the money pit.
This is not to say that technologists can’t replace humans with AI now (surely, with today’s advanced large language models, they could take out a large number of knowledge workers) or in the future, with something resembling an AI God.
It’s just to say that, at this juncture, these companies just aren’t profitable. This means that, if they end up in major index funds favored by 401(k) and IRA portfolios, you become the liquidity. At that point, you’ll be cheering for them to create an AI God and take your job. Either way, you might be going to zero.
Are you worried or excited aboutOpenAI, Anthropic, and SpaceX’s public debut? If you’d like to share, email [email protected] to tell us how you’re thinking about the IPO boom.
