How to spot the winners in 2026's IPOs

IPOs are starting to make a real comeback. The number of companies going public in the U.S. has been  climbing steadily each year since 2023 , signaling a healthier market for new listings.

And investors have noticed. Last year, the  average first-day return for IPOs came in at 29.3% , well above the long-term average of about 19% from 1980 to 2025. That kind of pop is hard to ignore.

These numbers have people wondering whether this momentum will finally bring some of the biggest private companies to market. Names like SpaceX, Anthropic, and OpenAI are at the top of many investors’ wish lists.

Still, it’s worth keeping expectations grounded. For all the excitement, several of last year’s most high-profile IPOs didn’t live up to the hype once trading began.

So what does this evolving IPO landscape actually mean for investors? Let’s take a closer look at what’s happening now, and what could be coming next.

What happened in the markets this Week?

⚠️ Private credit stress raises broader financial system concerns ( CNN )

• What happened : Investors are pulling money from private credit funds, prompting firms like Ares Management and Apollo Global Management to limit withdrawals to prevent a rush of exits. Concerns are rising due to opaque loan structures, higher interest rates, and potential defaults, although no major collapses have occurred.

• How it impacts investors: This highlights growing fragility in a fast-expanding corner of the financial system, which could spill over into banks and tighten lending conditions if risks escalate. For investors, it’s a reminder that hidden leverage and low transparency can amplify market volatility.

• Next steps : Explore our Financials sector insights and use the Stock Screener to identify banks and lenders with strong balance sheets.

📉 Big Tech faces rising scrutiny as social media risks likened to tobacco ( NYTimes )

• What happened : Lawmakers and regulators are increasingly comparing social media platforms like Meta and YouTube to tobacco companies, citing concerns over user harm and addictive design. The discussion is gaining traction in policy circles, with potential implications for future regulation and legal accountability.

• How it impacts investors : Growing regulatory pressure on social media giants could reshape the sector’s growth outlook, particularly around advertising models and user engagement practices. It also raises the risk of stricter rules, litigation, or reputational headwinds for major tech platforms.

• Next steps : Use our Tech sector screener to assess companies exposed to regulatory risk and explore alternative growth opportunities.

🌍 Trump signals progress on Iran talks as conflict and uncertainty persist ( CNBC )

• What happened : President Donald Trump said negotiations with Iran are making progress, with a proposed plan to end the conflict being discussed through intermediaries. However, Iranian officials have denied direct talks, and military tensions in the region continue alongside diplomatic efforts.

• How it impacts investors : Ongoing uncertainty around the conflict and negotiations keeps energy markets and global risk sentiment on edge, particularly given the potential disruption to oil supply routes. Any signs of de-escalation or escalation could quickly shift market volatility.

• Next steps : Explore our Energy sector insights to assess how geopolitical risks are shaping oil-linked investment opportunities.

🤖 Rising productivity may be tied to AI but the impact remains unclear ( Yahoo Finance )

• What happened : US worker productivity has been increasing, with some economists pointing to artificial intelligence as a contributing factor alongside cyclical and structural changes. However, researchers say it is still too early to determine how much of the gains can be directly attributed to AI.

• How it impacts investors: If AI is driving even part of this productivity boost, it could support stronger economic growth and corporate margins over time. But uncertainty around the source of gains means investors should be cautious about overpricing AI-driven expectations.

• Next steps: Explore our AI and high-growth tech themes to identify companies potentially benefiting from productivity tailwinds.

⚖️ Meta fell 8% on legal setbacks as court rulings add pressure on growth strategy ( CNBC )

• What happened: Meta lost two separate court cases in New Mexico and Los Angeles, with juries finding the company misled users about child safety and contributed to mental health harms. The rulings resulted in financial penalties, including US$375 million in one case.

• How it impacts investors: The decisions add to growing regulatory and legal risks facing big tech, which could lead to stricter oversight and higher compliance costs across the sector. For Meta specifically, it reinforces concerns around strategy, rising costs, and potential long-term pressure on its core advertising business.

• Next steps: Check out Meta’s company report to see if this will impact the company long-term.

First, a quick look back at IPOs in 2025 and their performance

Some big names made their market debut in 2025, with companies like Figma , CoreWeave , and Circle among the most anticipated IPOs of the year.

A handful have managed to hold onto investor enthusiasm, but many haven’t. In fact, since going public, only 10 of the 25 most anticipated IPOs of 2025 are trading above their IPO price as of now.

The range of outcomes has been wide. Karman Holdings sits at the top, up roughly 364% since its debut. On the other end, Gemini Space Station , a virtual currencies platform, has struggled, falling about 74%.

Those extremes help explain the gap between the average and the typical experience. The average return across all 25 companies is still a solid 18%, but the median return, which ignores the outliers, is actually down 17%. In other words, a small group of standout performers like Karman Holdings, Circle, CoreWeave, and Legence has done most of the heavy lifting.

It’s clear that IPO investing is very much a stock-picker’s game. And with nearly one-third of IPOs dropping on their first day , it’s not as easy as riding the hype.

How do IPOs tend to perform in the long-run?

In short: not great. Research shows that three years after going public, nearly two-thirds of IPOs are underperforming the broader market . Even more telling, about 64% lag by more than 10%.

So if the track record is this weak, why all the excitement?

Because the winners can be huge. The same research shows that roughly 29% of IPOs actually outperform, and when they do, the gains can be dramatic. It’s not uncommon for these stocks to double or even triple.

At the very top end, the results are even more striking. The best-performing 10% of IPOs deliver average market-adjusted returns north of 300% over a period of three years. Most IPOs disappoint, but the few that succeed can more than make up for it. If you pick a winner, the upside can be significant.

More research suggests that size, at least in terms of revenue, matters when it comes to post-IPO performance . Companies with higher sales at the time they go public tend to have a better shot at beating the market. On the flip side, those with less than $100 million in revenue typically struggle to keep up after their debut.

The implication is pretty straightforward: companies that want to perform well post-IPO may be better off waiting until their business is more mature, with stronger and more predictable sales. Higher revenues may also indicate the long-term viability of existing publicly traded companies. The screener below is an example of companies with strong earnings growth estimates.

Interestingly, that’s exactly the direction things seem to be heading. Over the past few decades, the number of IPOs has declined, suggesting companies are staying private longer and scaling further before going public.

Let’s take a closer look.

The strange case of the vanishing IPO market

While IPO activity has picked up in the past few years, the longer-term trend tells a different story.

Looking specifically at IPOs with an offer price of at least $5 - excluding ADRs, unit offerings, SPACs, and closed-end funds - the numbers have declined over time:

1. 1980s : 2,047 IPOs
2. 1990s : 4,092 IPOs
3. 2000s : 1,299 IPOs
4. 2010s : 1,175 IPOs

The drop-off since the 1990s is hard to ignore. Back then, U.S. IPOs made up about 26% of global issuanc e , roughly in line with the country’s 27% share of global GDP. But between 2000 and 2017, that changed, and U.S. IPO share fell to just 11%, even as its share of global GDP averaged closer to 30%.

So what’s behind the decline? One major factor is the rise of private markets. Since 2000, private equity has exploded in scale with more than 18,000 funds in operation today , a nearly 60% increase in just the past five years. With so much capital available privately, many companies no longer need to go public as early or at all.

That shift shows up clearly in the data. The number of publicly traded companies in the U.S. has fallen from around 6,900 in 2000 to just 3,952 by the end of 2024.

That said, there are signs things could be turning. In the first five years of the 2020s, there have been about 730 IPOs, or roughly 121 per year. If that pace holds through the rest of the decade, it would mark a meaningful break from the long-running downtrend.

Great Expectations: Eagerly anticipated IPOs in 2026

Artificial Intelligence

OpenAI

Recent reports suggest that an OpenAI IPO could arrive as soon as Q4 2026 . Nothing has been officially announced, but there are signs the company is starting to prepare for life in the public markets. For example, OpenAI has been building out its finance function , including hiring a new chief accounting officer and a corporate finance leader to oversee investor relations, both typical pre-IPO moves.

If it happens, the deal would give investors one of the first true pure-play opportunities in AI. It would also provide much-needed transparency into how OpenAI plans to turn its heavy spending into sustainable revenue, something investors have been eager to understand, especially given the scale of its capital expenditures.

The stakes are enormous. A funding round earlier this year reportedly valued the company at around $840 billion post-money, and some estimates suggest it could approach a $1 trillion valuation by the time it goes public.

At that level, it would easily become the largest U.S. tech IPO ever.

For context, here’s how that compares to some of the biggest tech IPOs in recent history:

1. Meta: $104 billion (2012)
2. Snowflake: $70 billion (2020)
3. Alibaba Group: $168 billion (2014)

In other words, an OpenAI IPO wouldn’t just be another high-profile listing, it would be in a league of its own.

Anthropic

In the race to go public, Anthropic looks to be running neck and neck with OpenAI. Late last year, the company reportedly hired law firm Wilson Sonsini to begin preparing for an IPO , a clear sign it’s laying the groundwork for a public debut. Its valuation is already sizable, sitting around $380 billion .

Anthropic has also made a point of differentiating itself. The company has been vocal about its approach, emphasizing that it won’t rely on advertising and that they will use “safeguards that would prevent the government from deploying its technology to target weapons autonomously and conduct U.S. domestic surveillance" according to reporting from Reuters. That more restrained positioning helps it stand out in an increasingly competitive AI landscape.

At the same time, its products are gaining traction. The release of Claude Code has shown it can compete with established software players, with some pointing to pressure on software stocks following its launch as an early signal of disruption.

Another key distinction is its focus. Compared to OpenAI’s broader reach, Anthropic is often viewed as more enterprise-oriented, positioning itself as a practical AI solution for business use cases rather than a wide-ranging consumer platform.

Aerospace

SpaceX

This is the big one. A SpaceX IPO would likely be the largest venture-backed listing ever , with some estimates pointing to a valuation as high as $1.5 trillion.

For a business this capital-intensive, going public would open the door to massive funding. That capital could help accelerate SpaceX’s long-term goals of expanding access to space and continuing to build out its Starlink low-Earth orbit internet network, which reportedly generated the bulk of the company’s roughly $15 billion in revenue last year . Timing-wise, if it does happen, it would likely come later in the year, most likely in the second half.

While this IPO would give retail investors new opportunities for growth, it could also have some downsides. For example, a SpaceX IPO could bring down Tesla’s valuation because investors would have another, possibly better, option for investing in the Musk brand. Today, they have just one: Tesla.

Software

Databricks

The San Francisco software company offers a cloud-based platform for data analytics and AI. The company helps its clients launch custom agents by connecting their data with AI models. They also provide tools for storing, processing and querying data. Simply put, they offer a single platform for all data, analytics, and AI workloads which eliminate the burden and cost of managing separate systems.

In the second half of 2025, they announced that their year-over-year growth rate was 55%, with a revenue run rate of over $4.8 billion. The company’s valuation sits at about $134 billion.

Many are looking to their IPO with excitement given the relevance of Databricks’ service in an AI world. As the Head of the Strategic Investment Group for JPMorganChase’s Security and Resiliency Initiative remarked, “ Databricks is a generational company that has become a backbone for enterprise data and AI.”

The Insight: Placing the Right Bets on IPOs

As the historical data shows, investing in newly minted public companies can feel like an all or nothing bet. Pick the right horse and you could win a triple-digit return. If you pick the wrong one you could be holding one of the roughly two-thirds of IPOs that lag the market by 10% three years after they hit the market.

As a long-term investor, here are a few things you can do:

• Companies with higher sales at the time they go public usually have a better shot at beating the market. When considering which post-IPO stocks to buy, consider going for the ones with the revenue north of $100 million.

• Once again, diversification is key. If you want to play the IPO game, spread the risk. Just one winner could make up for all the losers.

• Have a planned stop-loss. The IPOs that decline in their first days rarely make a comeback. It’s difficult for investors to take a loss but doing so early prevents larger ones later

Key events next week

Monday

• 🇯🇵 Japan Unemployment Rate (for February 2026)
  • 📈 Forecast: 2.5% Previous: 2.7%
  • ➡️ Why it matters: With a shrinking population and aging demographics, Japan faces a shortage of labor. A low unemployment rate confirms that industries are struggling to fill vacancies.

Wednesday

• 🇺🇸 U.S. ISM Manufacturing PMI

  • 📈 Previous: 52.4%
  • ➡️ Why it matters: The March reading will signal whether the factory sector is expanding or contracting.

Friday

• 🇺🇸 U.S. Non-Farm Payrolls

  • 📈 Forecast: 50k, Previous: -92k
  • ➡️ Why it matters: This is the single most market-moving US data release of the month, covering payroll gains, the unemployment rate, and average hourly earnings.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Stella and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.