GMO Warns of Potential Stock Market Correction Driven by Equity Supply Surge

GMO's Q2 2026 letter warns that a massive influx of equity supply—including the $2 trillion SpaceX (SPCX) lock-up expiration, potential IPOs from Anthropic (Anthropic) and OpenAI (OpenAI), and secondary offerings from cloud giants—could trigger a market downturn. Analysts Ben Inker and John Pease suggest the market is shifting from a 1% annual supply contraction to a 5% expansion, which historically correlates with a 4% decline in market value for every 1% increase in supply. They estimate returns over the next 12–18 months could be 20% lower than normal, potentially crashing the market before AI revenue expectations are even tested.