Today’s market mood is getting trickier. Themes related to artificial intelligence are going parabolic again, semiconductor stocks are surging, and valuation concerns are resurfacing just as some of the largest initial public offerings (IPOs) in years are preparing to come to market. It is tempting to see this as a classic late-cycle pattern: euphoric narratives, sky-high capex plans, and new-economy listings ringing the bell at the top.

Hype versus truth amid the IPO wave

However, history is less clear-cut. Past IPO waves did not always end cycles; more often, they reflected strong liquidity, a healthy risk appetite, and a market willing to fund future growth – something that matters today as well. 

The latest earnings season has revealed the hard numbers behind the hype: hyperscalers delivered another round of blowout results. This shows that they can monetise AI investments with revenue growth above 20% (the highest pace in four years) on a much larger base than back then, and this has fuelled a broad rally for the pick-and-shovel-makers of the boom, such as semiconductors and beyond.

Even in software and cybersecurity, which were presumed to be on the losing end, the picture is changing again. The technicals in these sectors are improving, and short interest is high, which creates room for sharp recoveries if the news flow stays constructive. What does this mean for investors? 

How to read the IPO boom

First, mega IPOs should not be mistaken for automatic ‘must-have’ trades over the following 12 months. However, they should also not be read as definitive end-of-cycle markers. Many of the biggest IPO candidates are only due later this year, or even in early 2027, which argues more for a constructive market window than for imminent exhaustion.

Second, the broader backdrop still calls for selectivity. We have flagged the upcoming European Central Bank rate hike as a likely one-off, downgraded oil to cautious, and continue to favour the recovery building up in software and cybersecurity. 

In short: stay alert to excess but do not confuse exuberance in one corner with the end of the whole cycle.

What investors should keep in mind

While headlines may focus on AI exuberance, rising inflation, or political uncertainty, the underlying message remains consistent: markets and economies rarely move in a single direction or narrative. As such, maintaining perspective, recognising nuance, and remaining selective remain key in navigating the evolving landscape.