AI and SpaceX IPOs tipped as ‘biggest games in town’

Artificial intelligence is poised to impact every sector and region of the global economy ahead of three major IPOs, according to US investment firm Jennison.

Visiting from New York, managing director and portfolio manager Tom Davis spoke with Investor Daily about the evolving AI investment cycle, highlighting both opportunities and risks in the fast-moving space.

“The thing that is so interesting about AI is it will, over time, impact every sector of the economy, globally – and every region of the world. We are seeing the earliest gain today, especially in the tech sector, in terms of what it’s been able to achieve at driving productivity and efficiency in software development, software coding development even to the point of replacing the need for human code,” he said.

Davis highlighted the potential impact of upcoming IPOs from OpenAI, Anthropic, and even SpaceX, which could spark a global scramble for exposure, intensified by fast-track inclusion into major indices.

From 1 May, Nasdaq will allow newly-listed large-cap companies to join the NDX roster immediately, rather than waiting up to one year, and it is understood SpaceX is targeting an IPO in June, expected to be the largest in history.

“These are going to be the biggest games in town,” Davis said. “Everyone wants a piece of this thing.”

But he warned of challenges, including index inclusion rules that could trigger massive waves of passive buying and create portfolio dilemmas for large asset pools.

“The indexes are likely to include them in 15 days, and a whole bunch of passive buying is going to take place, a massive wave of passive buying globally.”

Davis said pension and superannuation funds must navigate weighting, funding, and concentration risk in an already highly concentrated market.

“There’s a lot of uncertainty from an investment standpoint, even as there is so much anticipation, excitement and enthusiasm for what this whole AI thing means from an investment world,” he said.

SpaceX, he added, presents a similar strategic puzzle.

“It’s definitely not in this quite the same bucket as AI, but it is definitely in the bucket of cutting edge technology, space-based applications. It too will be a very large company when it comes public, it too will likely receive fast track inclusion in the indices. We’ll have to have the same debate in our minds about, how do we game the game, the position size, where, how are we going to fund it?”

Davis said the answer is as yet unclear.

“We’re all gonna have to figure this out in the next six months, because it’s like a train coming at us with a headlight staring us in the face.”

According to Carta’s The Australian Startup Outlook 2026, 96 per cent of startups still see an IPO as part of their plan, though nearly half view it as a long-term outcome.

“I’ve been doing this since the mid 90s. The number of IPOs that have come to market has gradually declined. Companies are staying private longer,” he said.

“They have more room to breathe. They have more room to build over time and test and try things. I think that’s probably part of the answer behind SpaceX and Open AI and Anthropic. They haven’t had to operate in a pressure cooker, public environment. They haven’t had to deal with all of us. They’ve been able to build things and experiment with things and try things.”

Commenting on AI more broadly, Davis noted that AI is still in its early stages, with the infrastructure boom only in “inning one,” and the ultimate prize being a potential shift away from the US$60 trillion global labour-and-software cost base.

“The infrastructure build out is nowhere near complete,” he said.

Despite roughly US$1 trillion already invested in AI infrastructure, Davis said the bigger opportunity lies in using agentic AI and large language models to reduce human labour and software costs, reshaping how businesses deploy talent.

“Those capabilities are going to be way more productive per unit of spend than the US$60 trillion that is us in software, because we only work eight to 12 hours a day. We have to sleep. This could go 24/7 – and it doesn’t require healthcare, benefits, or any other input that this does.”

However, chip manufacturing bottlenecks, particularly clean room capacity, are limiting current growth, prompting a fresh wave of investment across the semiconductor supply chain.

“One of the biggest bottlenecks is clean room space. When you go and talk to the supply chain, everybody’s capacity is constrained. Everybody’s trying to add capacity. So, we’re basically starting a whole nother investment phase in underlying infrastructure,” Davis told Investor Daily.

AI tokens are emerging as a new revenue metric, with user queries, enterprise workflows, and agent-to-agent interactions driving token consumption that generates income for large language model providers.

“When you or I sit here and type in a query into ChatGPT, we’re inputting a line of text and it’s outputting back to us an answer. A token is worth roughly about three quarters of a word. So the longer the query going in, takes more tokens on the inbound from us, the deeper it has to think, and the longer the answer back is more tokens on the outbound,” he said.

“Everything we do in AI, whether it’s us as an individual consumer or us as an enterprise use case, there are tokens going back and forth now and along the same line of thought.”

With enterprise contracts driving token usage into the trillions weekly, Davis expects further investment in data centres and semiconductors to support the next phase of agentic AI.

“What’s on the bingo card is changing really fast, and the capabilities of what’s on the bingo card are changing really fast,” he said.

Davis said global growth investors continue to focus on fundamentally strong, differentiated businesses that deliver products or services in demand, regardless of macroeconomic noise.

“We’re looking for companies that offer something that is pretty unique or differentiated that people want to pay for, or that a business is willing to pay for. We’re always watching to make sure that the investment case or the underlying investment thesis remains intact, that the business model, the product service remains in demand,” he said.

“If something changes there, you have to think about making changes regardless of the environment. But otherwise, you try to focus on what matters, and you try to block out some of that short-term noise.”