“The market has bad breadth” – Goldman Sachs analysts
Two IPO announcements within a 12-hour window have underscored a key paradox in today’s stock market.
First, on Monday night, leaked documents revealed that Anthropic is preparing for an initial public offering. The AI startup’s financial details quickly went viral across social media platforms, even though no official filing has been submitted yet.
Then, on Tuesday morning, Oura — known for its trendy smart rings — announced the opposite strategy. The company will not pursue an IPO in 2026, pointing to uncertain economic and market conditions.
So why is one rapidly expanding business hitting pause while another barrels forward? After all, Oura isn’t lacking momentum. It projects 90% revenue growth this year and already turns a profit with 5.7 million paying subscribers.
The answer comes down to a growing reality on Wall Street: being connected to AI seems to matter more than raw growth metrics.
This divide extends well beyond IPO decisions. While the S&P 500 hovers near record levels, its appearance of strength belies underlying weakness. A select group of AI-heavyweight stocks has been keeping the index elevated, while other sectors struggle amid rising crude costs and climbing bond yields.
Market participation is thinning out
Market breadth refers to how broadly companies participate in a rally when major indices like the S&P 500 approach new peaks. Regrettably, for many businesses, the celebration remains limited.
According to recent analysis from Goldman Sachs, even with the S&P 500 close to historic highs, the typical component stock is currently trading roughly 16% below its yearly peak. This represents the weakest breadth seen since the dot-com era.
The chasm between leading performers and the rest of the market has reached unprecedented extremes.
Bullish vs Bearish Takes
The central issue now is whether this trend supports long-term market stability. That depends largely on how soon economic pressures ease.
The optimistic outlook: A rotation opportunity
One hopeful interpretation, shared by firms like Goldman Sachs and Morgan Stanley, sees potential for overlooked stocks to rebound.
Many non-AI companies still report solid earnings and trade at reasonable valuations. Should geopolitical tensions subside and oil prices stabilize, bond yields might ease, improving investor sentiment toward broader markets.
However, this scenario requires several favorable developments — something Wall Street hopes for but cannot guarantee.
The pessimistic outlook: Economic headwinds persist
Undervalued doesn’t automatically mean poised for gains. For underperformers to catch up, there must be clear signs of de-escalation that lower energy prices and calm fixed-income markets. Such relief isn’t assured.
Beyond AI circles, numerous firms are holding back until conditions improve. In addition to Oura, both Holtec Nuclear and Bamboo Insurance recently delayed their own IPOs, each doing so shortly before scheduled pricing dates.
Coincidence that none focus primarily on AI, while Anthropic races toward one of the largest offerings ever? Likely not.
Anthropic’s upcoming debut will serve as a crucial indicator of how much appetite remains for AI-centric listings.
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