A tale of two IPOs shows just how warped the stock market has become

Two IPO headlines just landed within a 12-hour period that perfectly sum up one of the stock market’s greatest conundrums.

First, on Monday evening, Reuters got eyes on Anthropic’s leaked IPO prospectus. Social media was immediately ablaze with people highlighting eye-popping financial snippets. Although the company hasn’t officially filed yet, it appears to be full steam ahead.

Then, on Tuesday morning, Oura — the maker of ultra-popular smart rings — decided the opposite. It will not be pursuing an IPO in 2026, citing macro and market conditions that are too choppy.

So why is one fast-growing company pumping the brakes while another is forging ahead? After all, Oura is no slouch. It’s expecting 90% revenue growth this year. And it’s profitable, with 5.7 million paid members.

The difference boils down to an increasingly undeniable truth about the stock market these days: you’re either AI, or you’re out — regardless of how fast you’re growing.

That divide is playing out far beyond the IPO market. The S&P 500 remains within shouting distance of record highs, but its seemingly sturdy surface masks a shaky reality underneath. As a small group of AI-linked mega-caps has kept the index afloat, much of the market has been battered by higher oil prices and soaring bond yields.

The market has bad breadth

Stock market breadth is basically a measure of how many companies are joining the party as the S&P 500 hovers near all-time highs. Unfortunately for most of the market, the party is pretty exclusive at the moment.

Recent data compiled by Goldman Sachs shows that — despite the S&P’s near-record — the median stock in the index is trading 16% below its 52-week high. That’s the weakest breadth since the dot-com bubble, as the chart below shows. The gap between the market’s winners and everyone else has gotten historically extreme.

The real question is whether this is good or bad for the longer-term health of the market. The answer will hinge on whether the macro storm finally starts to clear.

The bullish interpretation: A catch-up trade

The most encouraging way to read this situation is the way both Goldman Sachs and Morgan Stanley are viewing it: as an opportunity for unloved stocks to catch up.

After all, plenty of companies outside the AI upper echelon still have healthy earnings and far less demanding valuations. If the Iran war subsides in a way that eases oil prices, bond yields could settle down, and investors’ view of the overall economic outlook will improve.

That’s a big “if”! Wall Street is choosing to view the glass half full … but it still has to happen.

The bearish interpretation: Macro doesn’t cooperate

Of course, cheap stocks do not automatically become winning stocks. For the catch-up trade to work, there needs to be a meaningful path to de-escalation — one that brings oil prices down and calms the bond market. That’s far from guaranteed.

Outside of the ivory tower of AI, more companies are parking on the sidelines until relief arrives. Looking beyond Oura, Holtec Nuclear and Bamboo Insurance also postponed plans to IPO over the past two weeks. Both did so just days before they were expected to price.

Is it a coincidence that neither is a pure-play AI company, and that Anthropic is barreling ahead with one of the biggest offerings ever? Of course not.

Anthropic’s looming IPO will be the next big test. It should shed light on just how much more top-heavy AI action the market can stomach.