Eric Hippeau, Lerer Hippeau managing partner, joins 'Squawk on the Street' to discuss the massive backlog of IPOs, what he expects in 2026, AI valuations, and more.

Eric Hippeau, partner at Lehrer Hippo, discussed the state of the IPO market and future trends in a CNBC interview. He noted that while AI companies have seen high private valuations, he expects the first $500 billion IPO to be SpaceX rather than an AI firm, citing the company's unique position in the rapidly growing space sector.

Hippeau highlighted that the public market is showing strong signs of recovery, with this year being the best for IPOs since 2021 and momentum expected to continue. He also emphasized the growing importance of space and AI-enabled hardware, predicting that space will be the next major investment frontier, with SpaceX well-positioned to capitalize on these opportunities.

SpaceX could be first $500 billion IPO, says Eric Hippeau

Let's bring in Lehrer Hippo, partner Eric Hippo, to discuss what he expects for the year ahead. Eric, clearly there's plenty of companies ready, but do you really believe this is going to be a year of unlock in the public markets, given how easy it's been for these companies to raise capital privately and put their own values on things? Well, good morning. We always hope that it's going to be the next year, but this year there are some really good signs. The IPO market, as you mentioned, is doing really well. The backlog is not going to be cleared all at once, but this year has been the best year for IPOs since 2021, and there's good signs to say that it's getting over to 2026. And do you think that the AI-related companies can actually get big valuation increases if they go public here, or have they already front-loaded a lot of that? We talk about OpenAI raising capital at an $800 billion valuation. That's bigger than all but a dozen public companies right now. Yes. We do live in some sort of a fantasy world when it comes to AI valuations. We're early-stage investors, and we feel it at the very early stages as well. The kinds of valuations that are being given to companies in the private market today in the AI field mean that there's going to be dozens, if not hundreds, of companies that are going to be worth $10 billion or more. That is not realistic. However, there will be some big companies that will emerge out of this. I suspect, however, that the first $500 billion IPO will not be an AI company, but will be SpaceX. Eric, you just took the question right out of my mouth, because next year is poised to be a big year in terms of some big offerings. I know this is still speculation, but OpenAI, or Andral Industries, and a number of others, but SpaceX, a possible $1.5 trillion offering. Is the public market ready for that? I believe so. I think space. If this year was the year for AI, the year for infrastructure, investing in power and energy, it was also the year that we saw robotaxis and robotics and automation starting to take center stage. I believe that next year will be the year of space. That's the next big frontier. We're talking about putting data centers in space. We're talking about the next warfare to be done in space. So there's a tremendous amount of activity going on in space with potentially huge rewards. SpaceX is extremely well-positioned, if not in a unique position, to capitalize on this. I would argue that it gets at an even broader trend here, too, which is this idea of not only industrial AI, but AI-enabled hardware, which we're seeing both in space and on Earth. Your thoughts? Yes, that's a big change, because what's happening in robotics, we're making commoditized components. In other words, components that are very cheap to produce and very cheap, very easy to get. We're putting an AI brain on them, and we're training them with visuals. It's so much easier to deploy them, to retrain them for new tasks. Robotaxis are a really, really good idea, a really good example of this. Both Waymo and Tesla are unleashing these driverless cars that are enabled by AI and are much safer than human drivers.

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