Some of the hottest names in the U.S. technology sector are debuting on public markets or gearing up to do so at eye-popping valuations, including OpenAI, Anthropic and — as of Friday — SpaceX.
But while splashy IPOs can see short-term upside for retail investors, financial experts say they often lag the market over a longer period of time.
That’s why many recommend that investors prioritize companies with track records of delivering returns instead.
“IPOs in general can often see strong first day performance and that’s a lot of the hype too that you do see, but usually over the following years many underperform the broader market,” said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James Ltd.
Shares in SpaceX jumped almost 20 per cent after opening for trading at noon Friday.
SpaceX opened at US$150 a share, then reached as high as $176.52 before pulling back to finish the day up 19.2 per cent at $160.95.
That price gave the company a market value of US$2.1 trillion, making it the sixth largest public U.S. company — larger even than electric vehicle maker Tesla, another company helmed by SpaceX CEO Elon Musk.
However, Gardner said she recommends letting the stock trade for around five to seven months before jumping in.
“Let the first wave of hype cool off, and then evaluate the business like any other investment that we invest in. For me, it’s at this point … I can evaluate their financials, their valuation, insider activity, technicals, and really look at other factors I consider before making an investment,” she said.
Gardner said that for her clients, IPOs are typically smaller positions and not core holdings.
For many IPOs, including SpaceX, she said it is often the case that those firms are not yet profitable, which means investors pay upfront for future earnings that can take years to materialize.
Other big-name American tech firms potentially looking to make their market debut include ChatGPT-maker OpenAI and Anthropic, the maker of the Claude chatbot. Both have filed preliminary paperwork with the U.S. Securities and Exchange Commission.
“We still think we’re in the early stages of this massive AI and space infrastructure cycle, that makes sense why a lot of retail investors want a piece of this action,” Gardner said.
Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management, said his firm does not invest in IPOs as investment decisions are based on price action and relative strength, which can’t be determined until a stock has sufficient trading history.
“Because it doesn’t have a trading history for people to look to, or evaluation history, there is more risk involved in playing something on an IPO or on the first day or shortly thereafter,” he said.
Cieszynski said nobody knows how the market may price a stock after it goes public and that those stocks can see a lot of volatility in the first few trading days.
“There have been big high-profile IPOs that have flamed out, and there have been big high-profile IPOs that over time have done incredibly well so it can go up, but it’s something that it could go either way,” he said.
Before a newly public company reports its first set of earnings, Cieszynski said investors are essentially “walking a tightrope without a net.”
“There’s a lot of uncertainties and moving pieces, but once you actually start getting real hard numbers coming out, then it starts to become more clear in terms of direction and momentum and things like that,” he said.
Mona Mahajan, head of investment strategy at Edward Jones, said she recommends investors not have any outsized holdings.
“We always say there’s room in your portfolio for what we call aggressive allocations or more speculative allocations, but probably not more than about five per cent of the portfolio,” she said.
This report by The Canadian Press was first published June 12, 2026.
— With files from The Associated Press.
