CNBC’s Jim Cramer said one of the biggest overlooked risks to the market is a coming wave of massive initial public offerings that could drain liquidity from stocks.
“A bull [market] can also be killed by excess supply — too many big IPOs and it collapses under its own weight,” said the “Mad Money” host on Monday.
Investors have been eagerly awaiting potential IPOs from OpenAI, SpaceX and Anthropic later this year, which are expected to draw enormous institutional and retail demand. With hype around artificial intelligence still running high, Cramer said these offerings could attract a disproportionate share of investor capital, pulling money out of the S&P 500 and other equities.
For OpenAI, the timing could depend on the outcome of a legal battle involving Elon Musk and Sam Altman. Jim Cramer said the key question is whether the company will ultimately be able to go public.
“If so, it will suck up a ridiculous amount of money because this thing could have a trillion-dollar valuation,” he said. “That money needs to come from somewhere — most likely it’ll come from the rest of the market.”
Musk’s SpaceX could be an equally large, if not larger, draw on capital markets. Cramer expects the company could be valued at $1 trillion or more, driven by Musk’s track record of making shareholders money as Tesla’s chief executive.
“Given that it’s Musk, it could be $2.5 trillion” he said.
Meanwhile, Anthropic is emerging as another major market darling, particularly among institutional investors. Cramer said its enterprise-focused model makes it especially attractive on Wall Street.
“It’s sticky. It’s not fickle like the consumer,” he said, adding that demand for the company’s shares is “insane,” and that it may be closer to profitability than its peers.
Cramer said that as exciting as each company may be, their success as public stocks may come at the expense of existing issues and funds. It’s not an immediate risk, he acknowledged, but it shouldn’t be ignored.
“When you take all the money that is headed to the three of these likely deals, you can only imagine how every other stock could suffer,” Cramer said.
“The bull runs on money,” he added. “It just might run out of money if this trio of IPOs goes through the chute at one time.”
