3. Equity market capacity is deeper than headline figures suggest

IPOs are the most visible part of equity market activity, and with a few $50 billion-plus IPOs in the pipeline across the street there are concerns about the market’s ability to absorb this unprecedented level of supply.

"The volume of issuance can appear daunting when viewed through the lens of a handful of very large transactions,” notes John Kolz. Structural support also looks different in this cycle: buybacks remain material, but they may provide less of an offset than in previous periods as major IPOs, equity-linked issuance and lock-up expiries add to supply.

This makes market depth more important. Today's equity market has significantly greater liquidity and more diverse sources of capital than in previous cycles. These factors have helped the market to absorb new supply while supporting aftermarket performance.

Money market fund balances have swelled to around $8.3 trillion² suggesting significant capital remains available for deployment, while trading activity has scaled beyond past cycles. Crucially, mega-cap transactions tend to draw from large-cap focused pools, helping preserve capital dedicated to small- and mid-cap equities. Portfolio mandates, benchmarks and concentration limits all help segment demand, preventing a handful of large deals from absorbing all available capital.

Away from the IPO market, execution is also becoming more flexible, with issuers increasingly combining common equity, convertibles, at-the-market (ATM) programmes and private investment in public equity (PIPE) and hybrid offerings to improve absorption rather than relying on one market and one moment.

Taken together, these dynamics suggest that equity market activity is being driven not only by improving issuance conditions, but also by a broader shift in how companies and investors are approaching capital formation.

Read our practical guide to the decisions boards should make before accessing equity capital.