IPO scarcity rush is a trap: How advisors should handle AI stock demand

The calls are coming in fast. Clients see SpaceX on the news, or hear that Anthropic or OpenAI may be heading toward a public listing, and they want in — immediately. For financial advisors, it is becoming one of the defining client communication challenges of 2026: how do you redirect genuine enthusiasm about a real investment theme toward a disciplined strategy, without dismissing the opportunity entirely?

Three advisors who work with clients across private markets, alternative investments, and tech equity compensation say the answer starts with a hard truth about where value is actually created — and a look at what the data shows happens after the bell rings on day one.

Most of the value is already gone by IPO day

Brian Boswell, a wealth manager at Savvy Wealth, puts the structural shift in stark terms. Twenty-five years ago, a company went public roughly four years after its first round of funding. Today that timeline is closer to 10 years, and the average company raises around seven rounds before it ever lists. The top 25 private, venture-backed U.S. companies are worth roughly $60 billion apiece, according to Boswell's estimates — and that value was built while they were still private.

"If your client only buys on the first day of trading, they've largely missed the part of the curve that built that value," Boswell said. "We'd rather own that growth on the way up, not after it's already been marked. For most clients the right answer isn't a single name like SpaceX or OpenAI — it's diversified, professionally managed access to a whole basket of late-stage private companies."

The data on IPO performance supports his caution. Jay Ritter, the Joseph B. Cordell Eminent Scholar Chair Emeritus at the University of Florida's Warrington College of Business and widely known as "Mr. IPO," is one of the leading authorities on initial public offering performance. His data shows the average first-day return for U.S. IPOs from 1980 to 2025 was approximately 19%. But the years that follow that pop tell a different story. Boswell cites Ritter's research showing that the average IPO underperformed the broader market by roughly 20% over the three years after listing — approximately five and a half percentage points of underperformance per year.

"The day-one pop is exactly the scarcity rush you're writing about; the three years that follow are where the disappointment lives. So when a client calls wanting in on a hot listing, the data says the smart money was already in — before the IPO." — Brian Boswell, CFP, Savvy Wealth

For clients who still want private market exposure, Boswell points to diversified fund structures as a more disciplined entry point. He cites Coatue's Innovative Strategies Fund as one example — a vehicle that blends public and private holdings, with its largest private positions including Anthropic and OpenAI. He is also direct about the trade-offs: private positions are illiquid, valued periodically rather than on a tick-by-tick basis, and redemption windows are limited — Coatue's fund, for instance, offers quarterly liquidity of up to 5%. "Illiquidity and less transparency is the price of admission, and clients need to understand that going in," Boswell said. 

The best AI entry points have already closed — but new ones are opening

Matt Malone, head of investment management and president of the registered investment adviser at Opto Investments, agrees that the window on the most obvious AI names has largely closed for new investors entering at current valuations.

"SpaceX, Anthropic, and OpenAI were much more interesting investments three or four years ago, when less capital was chasing them and valuations reflected uncertainty rather than consensus," Malone said. "While I would not bet against them, the early-stage, high-growth window is largely closed for those specific companies."

But Malone argues that closing one window opens another. His focus has shifted to what he calls the layer beneath the foundation models: AI infrastructure businesses operating in security, edge inference, and specialized compute. As agent-based AI architectures replace simple query-response tools, the attack surface for enterprises has expanded significantly — and the security infrastructure to address it has not kept pace. Similarly, he expects a large share of AI inference will ultimately need to run at the edge, closer to where data is generated, rather than routing everything through centralized cloud data centers.

For clients asking about AI exposure specifically through an IPO, Malone delivers a message many do not want to hear. The IPO, he explains, is not an entry point — it is a liquidity event for earlier investors. Public market buyers absorb the scarcity premium on day one. For high-profile listings with constrained floats due to lock-up schedules, that premium can be particularly sharp in the short term, followed by real price pressure as tranches of insider shares are released.

"Getting in at Series D or E valuations, when a company has real revenue and a credible path, is a different risk-return proposition than buying at IPO pricing that already incorporates years of optimism. The trade-off is illiquidity and a longer time horizon, and advisors who explain that clearly are doing their clients a service," Malone said.

For tech employees, the priority is often concentration — not more exposure

Annie Gottbehuet, managing partner at Mercer Advisors, brings a different perspective. Many of her clients are employees at the very companies generating the headlines, which means the conversation is less often about getting in and more often about getting out safely.

"Employees of these firms are often in a position where they have extremely concentrated exposure to one company, or a small number of companies, and that's a very risky position to be in," Gottbehuet said. "For those clients our goal is often to reduce that concentration, and transition to a diversified portfolio, in a tax-efficient way. Doing this right requires a combination of careful financial planning, institutional-grade investing capabilities, and tax- and estate-planning expertise."

For clients who hold broadly diversified portfolios and are wondering whether they need to add AI exposure, Gottbehuet's answer is often that they already have it. Any investor holding an S&P 500 index fund has meaningful stakes in the large-cap technology companies that have driven AI investment, and successful IPOs will eventually be added to the index.

She also offers a pointed three-part reality check on the megacap IPOs currently reaching the market. First, valuations are already elevated before a single public share trades, meaning the investment must continue appreciating substantially just to justify the entry price. Second, pre-IPO access in the period immediately before a listing is rarely available on favorable terms — investors often encounter elevated prices through complex structures. Third, the period immediately after a listing is frequently volatile. Gottbehuet notes that SpaceX's stock swung up and down by 30% in under a month following its public debut. "This is a really treacherous period for investors to jump into a company," she said.

Taken together, the three advisors point toward the same conclusion: the AI investment theme is real, and it is early. But the mechanism for capturing it matters enormously. Chasing a single name at IPO pricing is not a strategy — it is a reaction to a headline. The advisors best serving their clients right now are the ones who can redirect that impulse toward disciplined, diversified, long-horizon access to the private growth that precedes a listing.