Goldman and Morgan Stanley Vie for Dominance in Massive AI IPOs

Goldman Sachs and Morgan Stanley are currently locked in a high-stakes competition to secure the 'lead left' book runner position for the upcoming initial public offerings of AI giants OpenAI and Anthropic. While both firms are guaranteed prominent roles in these historic deals, the lead left designation—the primary position on an S-1 prospectus—offers significantly higher financial rewards than any other role in the underwriting syndicate. Having already secured this top spot for the upcoming SpaceX IPO, Goldman Sachs is looking to maintain its momentum in the tech sector.

The importance of the lead left position lies in the bank's authority to dictate share allocations to institutional investors. Because major funds, insurers, and endowments are eager to secure large portions of these high-demand IPOs, they often incentivize the lead underwriter through 'soft dollars'—excess commissions paid on trades. According to IPO expert Jay Ritter, these payments can dwarf the official underwriting fees. In the case of the SpaceX deal, while standard fees are estimated at $600 million, the potential for soft-dollar revenue generated by the stock’s 'pop' on its first day of trading could reach billions.

This dynamic creates a complex ecosystem where institutional investors must hedge their bets by funneling trading commissions to both Goldman Sachs and Morgan Stanley. Because the final lead left designations for OpenAI and Anthropic remain undecided, funds are incentivized to build profitable relationships with both investment banks to ensure they remain in contention for maximum share allocations regardless of which firm ultimately wins the top spot.

For the broader market, this competition highlights the immense scale of the upcoming AI IPO wave. With OpenAI and Anthropic expected to raise a combined $120 billion or more, the financial stakes for Wall Street are unprecedented. The outcome of this battle will not only determine the immediate profitability for these two banking titans but will also underscore the immense influence that lead underwriters wield over the distribution of capital in the burgeoning artificial intelligence sector.