The US capital market in 2025 is marked by unique events that perfectly capture the era of innovation, hyper-growth, and unprecedented dynamism. While the S&P 500 continues to break records—mainly thanks to tech giants—a revolution is underway in the IPO space. Yahoo Finance’s chart of the day shows the dramatic outperformance of tech IPOs over non-tech IPOs, giving a glimpse into a fundamental shift in how investors, funds, and institutions perceive innovation, risk, and opportunity.
Are we witnessing a new era for IPOs? What explains these stark return differentials? And can the wave of excitement surrounding AI, chips, and digital assets continue to drive the market forward?

Quantitative Picture – Tech IPOs Outperform Everything

Since early 2024, technology IPOs (those raising over $500 million) have delivered an average return of 108% from their offering price, compared to just 49% for non-tech IPOs. This gap is not random, but rather a reflection of a global surge in demand for stocks tied to innovation, artificial intelligence, cloud, and crypto—sectors now seen as the main engines of global economic growth.

Standout examples include: Circle, a stablecoin company, which surged more than 240% from its IPO price; CoreWeave, an Nvidia-backed AI company, which has soared nearly 300% since its late-March IPO; and several other AI infrastructure firms enjoying record demand.

Market Giants and the IPO Connection

The dynamic is not isolated from the broader market: the seven largest tech stocks (Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, Nvidia) accounted for around 62% of the S&P 500’s total gains in May 2025. Investors are increasingly focused on companies leading the digital transformation, and the energy from these mega-cap names is quickly spilling over into the IPO space.
In practice, today’s largest IPOs are tied to the same growth engines as the overall market—AI, cloud, and crypto—while the dominant stocks in the public markets are also the ones driving giant IPOs and capturing investor excitement.

The Source of Excitement – AI, Cloud, and Crypto

At the heart of this IPO boom is genuine enthusiasm about the AI revolution. Companies like OpenAI have raised tens of billions of dollars at astronomical valuations (OpenAI at $300 billion in March), while Elon Musk’s xAI is closing in on a $120 billion valuation.
More established tech names like Nvidia, Meta, Super Micro Computer, and Coinbase are among the S&P 500’s top performers since the bull market began in late 2022. The market is “thirsty” for innovation, and any company able to deliver AI solutions, advanced chips, or a crypto edge is quickly becoming an IPO darling.

Risk and Valuation – Not All Roses

Amid the enthusiasm, it’s important to note the phenomenon of lofty valuations—often disconnected from fundamentals. Many tech IPOs now trade at price-to-earnings or price-to-sales multiples far above historical norms, based on lofty growth expectations and the hope of transformative market change. This creates bubble risks, especially as high interest rates and increased regulation begin to impact capital markets.

The Broader Market – One-Way Traffic?

The US stock market has enjoyed an extraordinary tailwind from technology over the past year, but seasoned investors warn: not every tech IPO is a guaranteed success, and not every AI-linked company will deliver long-term profits. History shows that every IPO boom is followed by correction periods. Still, tech’s dominance in the S&P 500 doesn’t look to be fading, and the market may continue to reward innovation and public visibility for some time.

Strategy for Investors – Beware the Herd

Given the striking numbers, it’s crucial to remember that every IPO comes with unique risks: liquidity, volatility, macro factors, valuation concerns, and regulatory uncertainties—especially in crypto and AI. Prudent investors should carefully examine each company’s business fundamentals, capital structure, growth pace, and whether it has a genuine competitive edge—not just follow media hype or seasonal trends.

Summary and Outlook

The US IPO market in 2024–2025 is clearly driven by tech innovation, artificial intelligence, and excitement around hot sectors like crypto. The data shows a dramatic performance gap favoring tech companies, reflecting not only investor expectations but also a structural shift in the capital markets.
For now, as tech giants keep leading the public indices, it seems the tech IPO wave is far from over. Still, investors should remember: booms always give way to corrections, and those who carefully weigh risk versus opportunity will enjoy the potential—while avoiding the pitfalls.