It's time to redefine the technology industry after retail investors flocked to buy SpaceX shares in large numbers on its first trading day on 12 June, while also eagerly awaiting the IPOs of two major AI firms, OpenAI and Anthropic, expected later this year, reflecting the growing influence of AI and new big tech companies.
Data from Vanda Research showed retail investors net purchased $117 million of SpaceX shares on the first trading day, representing 56% of the total retail stock purchases in the U.S. market that day.
According to a Reuters report on Monday, retail investors were allocated about 20% of SpaceX's $75 billion IPO offering, higher than the average IPO allocation, while hedge funds received 10%, and long-term institutional investors held the largest share at 70%.
However, the $117 million net purchase figure from Vanda is separate from direct IPO allocations, as many shares were allocated through various brokerage firms.
Interestingly, this buying frenzy was specific to SpaceX, not a general resurgence of retail investor enthusiasm for individual stocks. In fact, Vanda found that total net purchases of individual stocks by retail investors last week amounted to only $209.3 million, the lowest level since March 2020.
SpaceX's popularity highlights a trend where investors focus on a few large tech companies that drive U.S. stock market returns.
The entry of SpaceX, along with the upcoming IPOs of leading AI developers OpenAI and Anthropic, is prompting a redefinition of the top-tier technology companies.
Investors originally knew the “Magnificent Seven” group, consisting of
But today, the list of star companies may no longer be limited to just these seven.
Vanda stated that if recent years were the era of the Magnificent Seven, last Friday may be the clearest signal that investors are starting to focus on what they call “FAB 10” or “Frontier AI & Big Tech 10.”
The FAB 10 group includes the original Magnificent Seven plus
Although OpenAI and Anthropic have yet to go public, they are widely expected to IPO this year with valuations in the hundreds of billions of dollars.
Vanda views these companies together as "the future of technology and AI that will shape the world over the next decade."
On Monday, 15 June, marked the first full day of trading forSPCX,SpaceX's stock briefly surged above $200 per share before closing around $192, up more than 20%, with approximately 244 million shares traded.
On Friday, the first day of trading, CNBC reported trading volume exceeded 500 million shares, approaching Meta's record from its 2012 IPO when nearly 580 million shares were traded on the first day.
Leif Abraham, co-CEO of investment platform Public, told CNBC, “On Monday, SpaceX's trading volume on the app was 533% higher than the second most traded stock that day, Nvidia.”
He added, “Even combining the trading volumes of Nvidia, Apple, Microsoft, Tesla, Meta, and Google, it still falls short of SpaceX’s volume.”
Additionally, after SpaceX's IPO underwriters exercised the Overallotment Option to sell more shares due to overwhelming demand,
an investor update on Monday indicated SpaceX raised a total of $85.7 billion, up from the original $75 billion target, making it one of the largest IPOs in global capital market history.
Many Wall Street investors and analysts are concerned that current valuations of technology companies may reflect a bubble, as many firms invest heavily in AI without yet delivering clear returns.
This means the new additions to the Magnificent Seven or FAB 10 face strong pressure to prove that their market valuations are justified.
If they fail to deliver expected earnings or growth, it could lead to a reassessment of valuations across the entire new tech stock sector.
Dan Alpert, founding partner and managing director of Westwood Capital, told CNBC, “Fundamentally, the market is currently lacking good opportunities to deploy capital for solid returns.”
“If these highly anticipated tech IPOs do not succeed, the market will start re-evaluating the valuations of all tech stocks.”
Nonetheless, despite massive retail investor enthusiasm, in reality, their investment remains a small fraction of total IPO deals, with most shares held by large institutional investors.
Before going public, SpaceX reduced its retail investor allocation to about 20% from the initially planned 30%, reflecting strong demand from hedge funds, asset managers, venture capitalists, and major institutional investors.
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