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Investing.com -- A potential wave of mega initial public offerings (IPOs) worth up to $3 trillion is prompting major index providers to reconsider inclusion rules, raising questions about how U.S. equities would absorb such supply.
The 10 largest U.S. venture-backed private companies currently carry a combined valuation of roughly $3 trillion, with “substantial probabilities that several of those companies will go public this year," Goldman Sachs strategists said in a note.
In response, Nasdaq and FTSE Russell have launched public consultations on easing index entry requirements, including reducing or removing seasoning periods and minimum float thresholds, while S&P Dow Jones Indices is reportedly also considering similar adjustments.
"Each of the three providers has noted the desire to maintain indices that represent – and provide investors with exposure to – the universe of relevant public U.S. equities," strategists led by Ben Snider said in a note.
Under proposed changes, IPOs could enter indices much faster. Russell may allow inclusion after just five trading days, while Nasdaq could scrap its three-month seasoning rule and provide a notice period of less than a month. Meanwhile, the S&P 500 currently requires 12 months of trading and profitability criteria for inclusion.
Even if rule changes are implemented, Goldman said the market impact may be more limited than feared. A hypothetical $1 trillion company with only 5% free float would carry just a 0.1% weight in the S&P 500 and 0.2% in the Russell 1000 Growth index, while it could reach around 1.4% in the Nasdaq-100 under proposed adjustments, strategists said.
They added that index inclusion of large market caps but low floats “would create less selling pressure on current index constituents than many investors fear.” Passive funds tracking major indices would generate relatively modest rebalancing flows, with estimated selling pressure representing less than 1% of market cap and 2% of daily trading volumes.
More broadly, Goldman argued that strong corporate demand should help absorb new supply. S&P 500 companies repurchased $1 trillion of stock in 2025, far exceeding $298 billion in equity issuance, while buyback authorizations have risen to record levels in 2026.
Taken together, the strategists believe corporate demand is likely to “easily outweigh supply this year,” even if several large IPOs come to market.