The Hottest IPO of 2026 Will Shock You

0:01Travis Hoium:It's Monday and Jensen Wang is making big deals. Motley Fool Hidden Gems Investing starts now.

0:09Travis Hoium:Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium joined today by Lou Whiteman and Tyler Crowe. Guys, we're taking over the Monday show today. So this we can bring some heat. And over the weekend, we got some interesting news, Tyler, that Jensen Wang and NVIDIA, again, making potentially massive deals. This time, the reporting from the Wall Street Journal is that they are going to basically backstop potentially a$250 billion project. I even saw$500 billion thrown around that OpenAI would like to build. Somebody's got to guarantee those debt payments, those lease payments, and NVIDIA apparently seems to have raised their hand.

0:51Tyler Crowe:Yeah. Well, you know, to the point we're all kind of having the substitute teacher energy today with the three of us doing the Monday show. So the funny thing was, is I feel like that Wall Street Journal article kind of buried the lead, too, because not only was NVIDIA saying they're going to guarantee that$250 billion, that's just for the build out of the facility and had nothing to do with the chips. And then there was like, and it could potentially also be another$350 billion in chips on top of the equity stake that NVIDIA has already invested in.

1:21Travis Hoium:Half trillion dollars between friends.

1:22Tyler Crowe:I mean, it really, the numbers now almost seem like they're just made up. I'm about to go$11 billion or something like for all these deals here. And again, this wasn't the only deal that was announced today. NVIDIA is on a real heater here. On top of the OpenAI deals that were announced, it was obviously smaller because these were smaller companies. But NVIDIA also decided to deal with Thinking Machines, which was a new startup coming out of the open AI genesis of people who started early on, as well as, I always mispronounce his last name, Ilya Sutskiver. Sutskiver, a safe super intelligence.

2:06Tyler Crowe:Awful name, dude. Get a better name. Either way, all three of these companies are just basically getting NVIDIA money thrown at them right now. And so a lot of money going out the door, really kind of, you know, we're going to touch on this like that circular accounting thing is starting to come back up again, which does give some people who have been around a little bit longer some nervous feelings.

2:30Travis Hoium:Lou, this reminds me a little bit about the discussions we've had about Eli Lilly. Hey, when the times are good and you've got a high valuation, you've got cash, try to build a remote around your business. Eli Lilly is buying other pharma companies. NVIDIA is making sure their customers are staying afloat.

2:46Lou Whiteman:Yeah, I'm glad Tyler didn't say bender. They're not on a bender today. They're on a roll, right? But maybe we'll see. It might turn into a bender. Here's the good news for NVIDIA shareholders is that there's enough cash there. This is not a bad balance sheet. So the debate here is whether or not the stock works or the stock doesn't work from here. It's not will the company fail. I don't think we have to worry about that. And look, there is a way that this all works out fine. The way is AI is everything we think it is. It generates all the revenue that we've seen in projections. Revenue solves all issues.

3:20Lou Whiteman:If all these companies can pay back all of this debt that they're taking on, NVIDIA's got nothing to worry about. But obviously, there's a lot of ways this doesn't work out. You know, Tyler mentioned the circular funding. The obvious comparison here is vendor financing in the 90s. I get the concerns. I get why that's scary, but let's just say balance sheets are a lot stronger than in the 90s, back to what I said before about NVIDIA. And this feels like a different business environment. In the 90s, we were financing fiber being laid that was 90 % not being used or even more. We just we were building excess capacity.

3:58Lou Whiteman:We weren't building for what we need today.

4:01Travis Hoium:Well, to be fair, we are building data centers that don't yet have chips in them. So we're not seeing the supply hit the market quite yet.

4:08Lou Whiteman:Data center vacancy rates are near record lows. I think right now the assumption, I mean, we see all these companies making deals. SpaceX is selling off its data centers wherever, whoever needs it. The neoclouds are all out there. There is a lot more today demand for data centers than there was for this fiber back in the 90s. Look, whether or not it all works out, I don't know. But I think that's an important distinction to remember here.

4:36Travis Hoium:Tyler, one of the things I always remember hearing is, well, it's not really a bubble until you start seeing debt involved. We've now seen debt. We've seen special purpose vehicles. We've seen guarantees of other companies' obligations. What should we be watching to potentially indicate that, you know, this isn't necessarily sustainable? Because we've been talking about this circular financing thing for quite a while now. Yeah.

5:02Tyler Crowe:Well, as far as I've seen so far, and obviously in part because it doesn't seem like either Anthropic isn't doing these kind of deals or they're being much quieter about it, which may be the smart thing to do. but it seems like a lot of these circular finance deals that we have heard about kind of all tie back to open ai in one way or the other and sometimes when you hear a lot of this like you know ai bubble sometimes i almost want to say it's more like an open ai bubble because it it's so much of this you know creative financing you know these circular finance deals meta you know off balance sheet deals a lot of these things seem to or especially oracle too with a lot of like the debt financing they're doing to build out.

5:47Tyler Crowe:A lot of that is tied to these IOUs that, you know, OpenAI has out in the field out there somewhere. And they're starting to look like the briefcase from Dumb and Dumber where when they open it up, instead of a million dollars, it's just a million IOUs.

6:02Travis Hoium:Yeah, to bring Oracle, that was one that I was thinking about as you were talking. Oracle shares, since they signed that huge deal with OpenAI, $300 billion worth of remaining performance obligations that was announced in late 2025, their stock is down 63 % since then. So the IOUs are great, but you also need that confidence in the market. So we will see if that maintains with NVIDIA backstopping a lot of its own customers. When we come back, we're going to talk about the latest IPO in the memory market. You're listening to Motley Fool, Hidden Gems, Investing.

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7:34Travis Hoium:Welcome back to Motley Fool Hidden Gems investing. We have the hottest IPO of 2026 hit the market in the last 24 hours. It's not SpaceX. It is CXMT. This is a company that most of us had never heard of until a few weeks ago, but it's a Chinese memory maker, the number four memory maker in the world. We talk a lot about Micron, SK Hynix, and Samsung. Those are the big three. This could be number three as early as next year because they're raising a whole bunch of money to expand their DRAM capacity. and the market's not reacting positively on the U.S. side. But this stock was up almost 500 % today.

8:13Lou Whiteman:Yeah, not bad for one day, right? And yeah, it was over in China. So we can't, I guess we can if we really, really want to try and play it. But it's not easy for us to play. But look, in theory, this is kind of bad news for all of those other players. We've talked about memory is very, very commoditized over time. And this is, like you say, this is an expansion IPO. The company already existed. but they're raising a ton of money to build out capacity, which should impact the supply. In theory, though, because, look, we still don't know if customers like Apple can buy products from CXMT. The Pentagon classifies this company as a Chinese military operation.

8:54Lou Whiteman:The Department of Commerce has not blacklisted it yet, and we don't know that they will. I know Apple is lobbying for it, but wait, this would solve a lot of our problems. So we'll see. But, you know, look, this is this is another company that's out there. They are expanding. It should. I mean, there is the rest of the globe, even if U.S. buyers can't can't access it. But this is, again, part of the big picture and memory that you really have to watch before you buy into these companies.

9:21Travis Hoium:Tyler, you've been following the energy markets for a long time. And the commoditization of memory looks a lot like the energy markets where you add a whole bunch of supply. It impacts prices. This is one of those things I've been hearing for months. You know what? This time is different in the memory market. And I don't know. This is now a fourth supplier that's going to bring a lot of capacity online. You start having four, five, six suppliers. That's how you get to commodity pricing. You're no longer an oligopoly.

9:53Tyler Crowe:One thing that management teams at commodity companies, whether it be oil and gas or mining or production of solar panels, basically anything that's commoditized like that, management teams there do tend to be pretty good at shooting themselves in the foot with overcapacity when things are a little too exuberant.

10:08Travis Hoium:So it's not like, you know, I feel like you and I have had too many conversations about this over the years.

10:12Tyler Crowe:Yeah, it's quite a few of them. Look, if I'm going to squint hard enough and try to be like, OK, maybe it's not that bad. The thing that you could justify here is the fact that CXMT doesn't really make a high bandwidth memory chip to the technology specifications that Micron is making these days or SK Hynix, basically the things that are being used in data centers. and there is the argument to be made of micron and sk hynix and all these other memory companies are just going to push into high bandwidth memory because they have the capacity they have the technology they have the data center demand and all that lower commodity commoditized you know to a lesser degree some d ram but not as as severe but also down into the flash memory level a lot of that stuff that is getting left behind the consumer electronics and all that stuff that We're hearing these nightmare scenarios of iPhone prices going up.

11:09Tyler Crowe:People can't get Nintendos and Xboxes because memory is going to go away. The theory is a company like CXMT can backfill some of that with the lesser technologically demanding sort of product. Maybe that's the case. The one thing that you do have to keep in mind here, this is a Chinese memory company. They are going to want to get into high bandwidth memory. There are some other presentations are saying within two to three years, they're going to be able to replicate more or less like SK Hynix's capacities about three years ago in terms of the technology. So, you know, there's a runway here. It's hard to tell.

11:46Tyler Crowe:And I find it kind of fascinating where we're looking at this particular equity raise of like$10 billion and they want to surpass Micron. But Micron has said they're going to spend$250 billion over the next 10 years on capacity expansion, too. So it's not just like, oh, yeah, this is going to be the Chinese overcapacity's fault, too, because everyone else is doing this, and they're going into their respective niches. So it goes back to what we were talking at the top here with NVIDIA. It's like if we do believe that the current spend rates are sustainable and that the power demands, the compute demands, and everything maintains its current trajectory, then overcapacity may not be a problem.

12:25Tyler Crowe:But those are some pretty bold assumptions. Whenever it comes to technological advances like this, there is going to be something that's going to make it cheaper, more affordable, less demanding on compute. Something along the way is going to come around to make that better. And that would, more than anything, be a bigger fear for these commoditized-esque type things like memory chips, whatever.

12:46Travis Hoium:Lou, there could be a potential upside here. That's if this brings more of that commodity, that DRAM supply to market. market, that means that electronics, whether it's Apple, I mean, you're filling a hole that there is in the market, whether it's Apple's products, whether it's Nintendo's products or just everywhere else that DRAM goes, could help pricing, which is actually good for consumers. And there should be some other investment opportunities as well. Right.

13:12Lou Whiteman:There's a reason Apple's would like to do business with them, because this is capacity now when you need it. And here's the other thing, too, is hopefully, again, the data center is all this and more. But there is a risk that Micron and some of these other companies are kind of abandoning their core customer, these kind of simple memory users as they chase the data center. And that could bite you if supply. Apple isn't going to say, oh, Micron. Yeah, you kind of left us hanging. But if you want our business now, we'd be happy to come back to you.

13:46Travis Hoium:Well, is it TSMC in this same scenario? You know, hey, we don't really want to talk to Intel. But if you're if you're not going to make our chips that we need to make our products, we got to talk to Intel.

13:56Lou Whiteman:Yeah, right. There's just a lot. And again, we don't know how this plays out. So this is hard and not really predicting future. But there's a lot of room for unintended consequences here that I think is worth watching.

14:06Travis Hoium:Unintended consequences may be the term of the rest of the year, because I have a feeling things aren't going to go quite as planned on the market. When we come back, we're going to talk about potential merger mania coming. You're listening to Motley Fool, Hidden Gems Investor.

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15:51Travis Hoium:Welcome back to Motley Fool and Gems Investing. To say the current administration has a different approach to mergers and acquisitions than the previous administration in the U.S. is, I think, an understatement. We've gotten very little pushback on some of the latest mergers, including Paramount buying Warner Brothers Discovery, at least on a federal level. So, Tyler, you had some interesting thoughts of this could lead to a boom in M &A activity, at least over the next couple of years as companies go, hey, these deals that we couldn't get done may actually get through and may actually get through pretty quickly.

16:28Tyler Crowe:Yeah, these things have been bubbling up a little bit to the surface in recent months, especially in industries where it almost seems like consolidation was never going to happen again. and talking about the Warner Paramount deal was obviously one. We're talking about railroads with the Norfolk Southern and the Union Pacific deal that seems to be working its way through, which I don't know, Lou, I think probably four or five years ago, we would have thought that is just unheard of, that nobody would have done that. And then just this earlier today, again, all of us just kind of opened up the Wall Street Journal this morning and said, hey, that's kind of interesting.

17:08Tyler Crowe:There was talks that United Airlines basically contacted the CEO of Delta Airlines and said, hey, what do you think about merging now? Some sort of, I don't know, deal of equals. The fascinating thing, though, is how I think it wasn't a couple of years ago under the Biden administration, the idea of the Spirit and JetBlue merger happening was like, no, we can't do this. This would be awful for competition. and then all of a sudden the top two or top three in some combination in the airlines is just going to sneak together. It's fascinating to me. It seems like a very unique period in time where probably under most other, I feel bad saying this because it sounds like it's very political, but under most other administrations, this sort of stuff would get a lot of blowback.