GMO Warns of U.S. Equity Headwinds as Mega-IPOs and Massive Supply Shift Threaten Returns

Prominent investment firm GMO has issued a stark warning to U.S. stock investors, cautioning that a structural shift in equity supply could dampen index returns by roughly 20% relative to normal over the next 18 months.
The firm notes that share supply is on track to expand by about 5% annually—a sharp reversal from the historical 1% net reduction driven by corporate buybacks—fueled heavily by massive listings and mega-IPOs from private tech giants like SpaceX, OpenAI, and Anthropic.
Highlighting that passive, benchmark-aware index funds leave fewer active buyers available to absorb this unprecedented flood of new equity, GMO warns that the supply surge risks triggering a market correction, particularly within highly sensitive AI and large-cap growth sectors.