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Silicon Valley sets its sights on building the perfect baby

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If you could design your ideal baby, what would you choose? A lover of naps who sleeps through the night? A mind for math and an affinity for the viola? For the founders of fertility tech startup Herasight, this is not a hypothetical. 

Herasight founder Michael Christensen is 6-foot-6, and even in a world where taller men are perceived as stronger and more competent, it’s a bit much. He wants his future children to be shorter and more comfortable on commercial planes. 

“It’s annoying to be super tall,” he said. “Nothing is made for you.” 

Chief science officer Tobias Wolfram has already banked frozen embryos with his partner in preparation for their future family. His great-grandparents lived past 100 with no cancer or serious health problems, suggesting a family tendency toward healthy aging. But there’s depression on his side of the family. 

“I’d really like to make sure that’s not passed down,” he said. Wolfram has waited five years for Herasight’s technology to reach its current state, so that he can screen embryos for mental health indicators. 

Jonathan Anomaly, a communications executive with Herasight, is approaching 50 and planning a family with his partner, 37. His grandmother was a genius, said Anomaly, but she suffered from five different autoimmune disorders that kept her homebound. He plans to screen embryos for autoimmune diseases, and like Christensen, Anomaly said he’ll screen for height. But he wants potential sons to be slightly taller than his 5 feet 9 inches. 

This is the new era of family planning emerging across the Bay Area, a place known for its concentration of extreme wealth, high risk tolerance, affinity for new technology, and early-adopter mentality. Rather than having babies the Where Did I Come From? way, prospective parents are blazing an unprecedented approach to family planning. Gone are the wealthy parents who pay women for their eggs because they have desirable traits or who seek out sperm donors based on Ivy League degrees and athletic prowess. This is reproduction reimagined through the lens of algorithms and data science down to the genetic blueprint that makes up a human being. 

This new method means opting for IVF from the start even if infertility isn’t an issue to create embryos. From there, prospective parents are investing thousands in different types of next-level embryo screening that can essentially spin up versions of your future children’s health prospects by showing their risk of inherited diseases, childhood cancers, schizophrenia, autism, and Types 1 and 2 diabetes. Other traits like height, body mass index, musical ability, and higher IQ points are also among the offerings at certain firms. And with billionaires backing fertility tech startups and funding new research related to conception and embryo selection, the boundaries between proven science, emerging possibilities, and aspirational hype become increasingly complex to parse.

On the outer edges, scientists and researchers are studying the efficacy of penis transplants, and five have been performed worldwide so far, including one in the U.S. Uterus transplants have led to 29 live births, nearly all by C-section. A team of Chinese scientists successfully conceived mice with two male mice fathers—without DNA from a mother mouse. And more is on the horizon, including AI-enabled and automated IVF processes that could lower costs substantially and artificial womb development. A height and intelligence screening startup backed by Reddit and Seven Seven Six fund founder Alexis Ohanian plastered New York City subway stations with ads this month for Nucleus Genomics, imploring riders to “Have Your Best Baby.”

The global IVF industry remains a nascent $28 billion enterprise, and investment in women’s health and IVF-related tech startups began picking up last year, with 2024 standing out as the largest year for investment at $2 billion, a 55% increase over 2023. 

Some of these new add-ons to IVF are driven by people who just “want to know” about their embryos in the way people want to find out the sex of their baby before birth, said Barry Behr, director of Stanford’s IVF lab and a professor of obstetrics and gynecology who is known for his groundbreaking work in improving IVF and advancing the field of embryo selection. Other times, it’s about how to make more money from the IVF process or lower the cost for patients. Regardless of the motivation, for anyone who has had a child or relative who has been sick with a debilitating disease or condition, “you know how that makes you feel,” said Behr, who is an advisor to Orchid Health, which offers embryo screening. 

“A parent would do anything—give a kidney, give a limb, or whatever you could give to a child to avert suffering,” said Behr. “So don’t tell me how anyone could even question doing something to your embryo that we do for other reasons routinely.” 

Yet the rapid pace of innovation and investment has created a regulatory and ethical vacuum, experts have observed. “Technology will always outpace the law,” said Rich Vaughn, a prominent fertility lawyer who has seen the field evolve during the past two decades. “Technologies develop first; law and regulations make things legally safer for everyone, but they trail behind.”

Moreover, the controversial process of embryo editing—which refers to changing the DNA of an embryo before it is implanted and is illegal in 70 countries or banned through funding restrictions—is being studied and backed financially despite the considerable risk involved. Coinbase cofounder and billionaire Brian Armstrong said he invested in embryo-editing startup Preventive, which has raised $30 million. Armstrong is joined by OpenAI CEO and cofounder Sam Altman’s husband, Oliver Mulherin. 

Another startup focused on embryo editing is led by former Thiel Fellow Cathy Tie, who wants to genetically correct mutations in embryos before they are implanted to dramatically minimize the risks of inherited disease. (Investor Peter Thiel offers a two-year, $200,000 fellowship program to entrepreneurs who want to drop out of or take time off from college to focus on developing an idea.)

“I believe that gene correction technology is much more effective in achieving those goals than embryo screening,” said Tie, cofounder of Manhattan Genomics. She plans to begin testing on nonhuman primates early next year before moving to human embryos, pending regulatory approval. 

Tie believes many couples, especially those with relatively older women, wind up with too few embryos to choose from after they go through the process of stimulating their follicles and retrieving eggs. “Let’s say I’m a woman in my mid-thirties,” said Tie. “I’m lucky if I’ll get 10 eggs, and from that I’ll maybe get two embryos. Then a company will tell me one embryo is better than the other.” Despite public controversy over embryo editing, which alters genes that would be passed down to new generations and involves irreversible decision-making, Tie said she has received a lot of support from researchers, scientists, and IVF doctors. 

Hank Greely, a Stanford law professor who specializes in issues surrounding biomedical technologies and authored The End of Sex, a 2016 book that predicted humans will eventually reproduce mainly through IVF, told Fortune screening for cosmetic traits like hair, eye, and skin color or nose shape isn’t far off. 

People in Silicon Valley, where Greely lives,are most interested in influencing their offspring’s intelligence, personality, musical and sports ability, and proficiency in math. Right now those are areas scientists “know almost nothing about,” he said. 

But the technology is moving at a swift pace, and some experts think the line between acceptable and not will evolve as well. 

“There was a time when it wasn’t appropriate to show your knees, and now you can wear a thong at the beach,” said Behr. “The line moves with time.”

The new line in tech-assisted IVF

Reproductive tech startup CEO Noor Siddiqui has a personal inspiration behind founding polygenic screening firm Orchid Health. Her mother suffers from a rare genetic eye condition called retinitis pigmentosa, which led to progressive vision loss and her mother’s eventual blindness. Siddiqui, also a Thiel Fellow, said she was motivated to pursue embryo screening after watching her mother’s condition progress. Siddiqui also plans to have four children, and has screened her own embryos using Orchid’s technology. 

The firm occupies the middle ground of the IVF tech market—pushing the boundaries of science, but mainly to prevent disease.

For years now, prospective parents who use IVF to have babies have been able to opt for preimplantation genetic testing to make sure the embryo has the correct number of chromosomes. In addition to chromosomal abnormalities like trisomy 21—an extra copy of chromosome 21 that causes Down syndrome—tests also scan for life-altering diseases stemming from single-gene mutations like sickle cell anemia or cystic fibrosis. 

Orchid offers “polygenic risk” scoring for their embryos. The startup counts Day One Ventures and Prometheus Fund among its backers, as well as angel investors including Figma CEO Dylan Field and 23andMe cofounder Anne Wojcicki. Eventbrite cofounders Julia and Kevin Hartz have also invested in Orchid, and the couple screened their embryos for inherited diseases including Alzheimer’s before having twins they dubbed “Cohort 2” after their first two daughters were in their teens. Published reports have anonymously quoted sources claiming that Shivon Zilis, who has children with the world’s wealthiest man, Elon Musk, has used Orchid’s services. 

Orchid’s approach involves whole genome sequencing, and expands on traditional screening by sequencing nearly all of an embryo’s genome. Siddiqui said Orchid scans for more than 1,000 genetic diseases as one option for clients, while another option scans for 3,000 single-gene diseases, covering inherited and spontaneous changes in the embryo. Traditional tests scan for chromosome numbers and single-gene disease. She often compares it to publishing a book that a writer would want to be fully accurate. 

“If your proofreader didn’t actually read your book to check for spelling errors, missing words, missing punctuation, would you be satisfied if they just told you all the chapters were present?” she said. Siddiqui said parents are also interested in the genetics of autism, and Orchid screens can detect genetic mutations in specific genes known to cause autism spectrum disorder, although it cannot predict all autism risk. Experts have warned that there is no reliable test for autism, although recentstudies have found a genetic cause in 25% to 50% of cases. 

“We want the maximum amount of information to be provided to parents to mitigate the maximum amount of risk when it comes to genetics,” said Siddiqui. 

Herasight, the startup with the three founders who each are hoping to screen for traits in their next generation, recently emerged from stealth mode after several years and conducts polygenic screening with a different technical approach that allows it to work with any IVF clinic. It screens the data for potential childhood and adult diseases and health problems, and in some cases height, IQ, longevity, and mental health conditions like depression. 

The firm offers a free IVF calculator so prospective parents can get an idea of their chances at conception, from retrieving eggs through birth, based on more than 100,000 IVF treatment cycles recorded in the U.K. national registry. Herasight’s published studies show it can reduce disease risks by 20% to 44% when selecting among five embryos. The validation results come from the firm’s own research rather than independent studies, but Herasight has published its methods and data for others to review. The company’s research has shown what they call “positive pleiotropy,” which means when selecting against one disease, parents often reduce risks for related conditions, too. 

“Everyone has a unique family history, so we don’t have one type of customer,” Christensen told Fortune. Sometimes a prospective parent will come to the firm, excited about screening embryos for IQ, and then they’ll discover a BRCA gene mutation, which can increase the risk of breast and ovarian cancers. Then that becomes the top priority in screening embryos, said Christensen. Anomaly said every embryo-screening choice represents a tradeoff. “Creating the perfect baby—that doesn’t exist,” he added. 

Kyle Farh, a scientist with DNA sequencing and genetic analysis company Illumina’s artificial intelligence lab, said a huge gap in data interpretation remains at the moment because AI models simply need more information. About 1 million people globally have sequenced their genomes, and realistically about 1 billion people need to sequence their genomes for models to function more meaningfully. 

“It’s a chicken and egg problem,” said Farh. “We can predict [traits], and we can show that there’s some significant correlation between our predictions and what happens in real life, but the correlation is still very poor.”

But for parents looking to prevent a major life-altering disease, the technology has been transformative. Software engineer and consultant Roshan George and art director Julie Kang, who live in San Francisco, hired Orchid to screen their embryos after the couple discovered they shared a genetic mutation that could cause profound deafness in their children. One day after having their newborn daughter, Astra, it took about two minutes to find out if the thousands they invested in embryo screening had helped them toward the outcome they wanted for their child. A tech gave Astra a hearing test in their sunny Sutter Health hospital room, the culmination of months of genetic analysis and embryo risk scores. 

“I mean, we spent all this money, we did this whole thing and got through all this,” said George. The test showed Astra’s hearing was normal, and the new parents were relieved and are planning for another child soon; they still have screened embryos, George said. 

Cases of preventing disease are growing, which is giving these startups a boost. And in addition to screening for certain health risks, founders are hopeful that the impact on pregnancy loss for couples and families who go through IVF will be substantial. Certainresearch shows chromosomal abnormalities are responsible for about 50% of first-trimester miscarriages, and the hope is that screening allows people to prioritize embryos most likely to result in successful pregnancies. 

But the use cases that scientists and ethicists fret about aren’t quite here—yet. “Even the most optimistic folks—and I think scientists and most geneticists are way too optimistic—think they can account for, oh, three or four IQ points,” said End of Sex author Greely. “Plus, we know plenty of ways to improve IQ test results with things like good childhood nutrition, childhood vaccinations so kids don’t get sick, and parents who read to their kids.” Brains are incredibly complicated, he said, and may ultimately prove too complicated to screen for intelligence and qualities like extroversion. 

“It makes great headlines, it makes great clickbait, it makes great dystopian science fiction,” said Greely. “But the designer baby idea? At least when you’re talking about behavioral traits, it’s not very plausible—at least for decades.”

But given the intensity and expectations of the tech-oriented set interested in this brave new world, NYU bioethicist Arthur Caplan notes there’s a danger that some parents might view their children as products and potentially even “commercial failures.” He questions how positive this will be for kids. “When you start saying, ‘I tested you, and I have a certain outcome that I expect,’ you’re taking away the kids’ future,” said Caplan. “You’re making them less free because you have expectations, and they better turn out that way.”

Victoria Fritz and her husband, who used Herasight to screen embryos to try to prevent passing along her Type 1 diabetes, hope to do an embryo transfer in January, and are realistic about the prospect.

“I feel like, regardless of what embryo we choose, we will hopefully have a happy, healthy child and be a happy family regardless,” said Fritz. The screening provides peace of mind, she noted, but “it doesn’t guarantee that your child is going to have a perfect, healthy life.”



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Leaders at Davos are obsessing over how to use AI at scale

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  • In today’s CEO Daily: Fortune‘s AI editor Jeremy Kahn reports on the AI buzz at Davos
  • The big story: SCOTUS could upend Trump’s leverage to acquire Greenland.
  • The markets: Jolted by Trump’s renewed tariff threats.
  • Plus: All the news and watercooler chat from Fortune.

Good morning. I’m on the ground in Davos, Switzerland, for this year’s World Economic Forum. As Diane wrote yesterday, U.S. President Donald Trump’s arrival later this week along with a large delegation of U.S. officials eclipses pretty much every other discussion at Davos this year. But, when people here aren’t talking about Trump, they are talking about AI.

At Davos last year, the hype around AI agents was pierced by the shock of DeepSeek’s R1 model, which was released during the conference. We’ll see if a similar bit of news upends the AI narrative again this year. (There are rumors that DeepSeek is planning to drop another model.) But, barring that, business leaders seem to be less wowed by the hype around AI this year and more concerned with the nitty-gritty of how to implement the technology successfully at scale.

On Monday, Srini Tallapragada, Salesforce’s chief engineering and customer success officer, told me the company is using ‘forward deployed engineers’ to tighten feedback loops between customers and product teams. Salesforce is also offering pre-built agents, workflows, and playbooks to help customers re-engineer their businesses—and avoid getting stuck in “pilot purgatory.”

Meanwhile, at a side event in Davos called A Compass for Europe, that focused on how to restore the continent’s flagging competitiveness, AI was front-and-center. Christina Kosmowski, the CEO of LogicMonitor, told the assembled CEOs that to achieve AI success at scale, companies should take a “top down” approach, with the CEO and leadership identifying the highest value use cases and driving the whole organization to align around achieving them. Neeti Mehta Shukla, the cofounder and chief impact officer at Automation Anywhere, said it was critical to move beyond measuring automation’s impact only through the lens of labor savings. She gave specific customer examples where uplifting data quality, improving customer satisfaction, or moving more workers to new tasks, were better metrics than simply looking at cost per unit output. Finally, Lila Tretikov, head of AI strategy at NEA, said Europe has enough talent and funding to build world-beating AI companies—what it lacks is ambition and willingness to take big bets.

Later, I met with Bastian Nominacher, co-founder and co-CEO of process analytics software platform Celonis. He echoed some of these points, telling me that to achieve ROI with AI generally required three things: strong leadership commitment, the establishment of a center of excellence within the business (this led to an 8x higher return than for companies that didn’t do this!), and finally having enough live data connected to the AI platform.

For further AI insights from Davos, check out Fortune’s Eye on AI newsletter. Meanwhile, Fortune is hosting a number of events in Davos throughout the week. View that lineup here. And my colleagues will be providing more reporting from Davos to CEO Daily and fortune.com throughout the week.—Jeremy Kahn

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

This is the web version of CEO Daily, a newsletter of must-read global insights from CEOs and industry leaders. Sign up to get it delivered free to your inbox.



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Stock market today: Dow futures tumble 400 points on Trump’s tariffs over Greenland, Nobel prize

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U.S. stock futures dropped late Monday after global equities sold off as President Donald Trump launches a trade war against NATO allies over his Greenland ambitions.

Futures tied to the Dow Jones industrial average sank 401 points, or 0.81%. S&P 500 futures were down 0.91%, and Nasdaq futures sank 1.13%. 

Markets in the U.S. were closed in observance of the Martin Luther King Jr. Day holiday. Earlier, the dollar dropped as the safe haven status of U.S. assets was in doubt, while stocks in Europe and Asia largely retreated.

On Saturday, Trump said Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland will be hit with a 10% tariff starting on Feb. 1 that will rise to 25% on June 1, until a “Deal is reached for the Complete and Total purchase of Greenland.”

The announcement came after those countries sent troops to Greenland last week, ostensibly for training purposes, at the request of Denmark. But late Sunday, a message from Trump to European officials emerged that linked his insistence on taking over Greenland to his failure to be award the Nobel Peace Prize.

The geopolitical impact of Trump’s new tariffs against Europe could jeopardize the trans-Atlantic alliance and threaten Ukraine’s defense against Russia.

But Wall Street analysts were more optimistic on the near-term risk to financial markets, seeing Trump’s move as a negotiating tactic meant to extract concessions.

Michael Brown, senior research strategist at Pepperstone, described the gambit as “escalate to de-escalate” and pointed out that the timing of his tariff announcement ahead of his appearance at the Davos World Economic Forum this week is likely not a coincidence.

“I’ll leave others to question the merits of that approach, and potential longer-run geopolitical fallout from it, but for markets such a scenario likely means some near-term choppiness as headline noise becomes deafening, before a relief rally in due course when another ‘TACO’ moment arrives,” he said in a note on Monday, referring to the “Trump always chickens out” trade.

Similarly, Jonas Goltermann, deputy chief markets economist at Capital Economics, also said “cooler heads will prevail” and downplayed the odds that markets are headed for a repeat of last year’s tariff chaos.

In a note Monday, he said investors have learned to be skeptical about all of Trump’s threats, adding that the U.S. economy remains healthy and markets retain key risk buffers.

“Given their deep economic and financial ties, both the US and Europe have the ability to impose significant pain on each other, but only at great cost to themselves,” Goltermann added. “As such, the more likely outcome, in our view, is that both sides recognize that a major escalation would be a lose-lose proposition, and that compromise eventually prevails. That would be in line with the pattern around most previous Trump-driven diplomatic dramas.”



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Goldman investment banking co-head Kim Posnett on the year ahead, from an IPO ‘mega-cycle’ to another big year for M&A to AI’s ‘horizontal disruption’

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Ahead of the World Economic Forum‘s Annual Meeting in Davos, Switzerland, Fortune connected with Goldman Sachs’ global co-head of investment banking, Kim Posnett, for her outlook on the most urgent issues in business as 2026 gathers steam.

A Fortune Most Powerful Woman, Posnett is one of the bank’s top dealmakers, also serving as vice chair of the Firmwide Client Franchise Committee and is a member of the Management Committee. She was previously the global head of the Technology, Media and Telecommunications, among several other executive roles, including Head of Investment Banking Services and OneGS. She talked to Fortune about how she sees the current business environment and the most significant developments in 2026, in terms of AI, the IPO market and M&A activity. Goldman has been the No. 1 M&A advisory globally for the last 20 years, including in 2025 — and Posnett has been one of the star contributors, advising companies including Amazon, Uber, eBay, Etsy, and X.

  • Heading into Davos, how would you describe the current environment?  

As the global business community converges at Davos, we are seeing powerful catalysts driving M&A and capital markets activity. The foundational drivers that accelerated business activity in the second half of 2025 have continued to improve and remain strong heading into 2026. A constructive macro backdrop — including AI serving as a growth catalyst across sectors and geographies — is fueling CEO and board confidence, and our clients are looking to drive strategic and financing activity focused on scale, growth and innovation. As AI moves from theoretical catalyst to an industrial driver, it is creating a new set of priorities for the boardroom that are top of mind for every client we serve heading into 2026.

  • What were the most significant AI developments in 2025, and what should we expect in 2026?

2025 was a breakout year for AI where we exited the era of AI experimentation and entered the era of AI industrialization. We witnessed major technical and structural breakthroughs across models, agents, infrastructure and governance. It was only a year ago, in January 2025, when DeepSeek launched its DeepSeek-R1 reasoning model challenging the “moats” of closed-source models by proving that world-class reasoning could be achieved with fully open-source models and radical cost efficiency. That same month, Stargate – a historic $500 billion public-private joint venture including OpenAI, SoftBank and Oracle – signaled the start of the “gigawatt era” of AI infrastructure. Just two months later in March 2025, xAI’s acquisition of X signaled a new strategy where social platforms could function as massive real-time data engines for model training. By year end, we saw massive, near-simultaneous escalation in model capabilities with the launches of OpenAI’s GPT-5.1 Pro, Google’s Gemini 3, and Anthropic’s Claude 4.5, all improving deep thinking and reasoning, pushing the boundaries of multimodality, and setting the standard for autonomous agentic workflows. 

In the enterprise, the conversation has matured from “What is AI?” just a few years ago to “How fast can we deploy?” We have moved past the pilot phase into a period of deep structural transformation. For companies around the world, AI is fundamentally reshaping how work gets done. AI is no longer just a feature; it is the foundation of a new kind of productivity and operating leverage. Forward-leaning companies are no longer just using AI for automation; they are building agentic workflows that act as a force multiplier for their most valuable asset: human capital. We are starting to see the first real, measurable returns on investment as firms move from ‘AI-assisted’ tasks to ‘AI-led’ processes, fundamentally shifting the cost and speed of execution across organizations. 

Of course, all this progress is not without regulatory and policy complexities. As AI reaches consumer, enterprise and sovereign scale, we are seeing a divergence in global policy that boards must navigate with care. In the United States, recent Executive Orders — such as the January 2025 ‘Removing Barriers’ order and the subsequent ‘Genesis Mission’ — have signaled a decisive shift toward prioritizing American AI dominance by rolling back prior reporting requirements and accelerating infrastructure buildouts. Contrast this with the European Union, where the EU AI Act is now in full effect, imposing strict guardrails on ‘high-risk’ systems and general-purpose models. Meanwhile, the UK has adopted a “pro-innovation” hybrid model: on the one hand, promoting “safety as a service”, while also investing billions into national compute and ‘AI Growth Zones’ to bridge the gap between innovation and public trust. For our clients, the challenge is no longer just regulatory compliance; it is strategic planning and arbitrage – deciding where to build, where to deploy, who to partner with, what to buy and how to maintain a global edge across a fragmented regulatory landscape.

As we enter 2026, the pace of innovation isn’t just accelerating; it is forcing a total rethink of business processes and capital allocation for every global enterprise. 

  • Given the expectation and anticipation for IPOs this year, what is your outlook for the market and how will it be characterized?

We are entering an IPO “mega-cycle” that we expect will be defined by unprecedented deal volume and IPO sizes. Unlike the dot-com wave of the late 1990s, which saw hundreds of small-cap listings, or even the 2020-2021 surge driven by a significant number of billion-dollar IPOs, this next IPO cycle will have greater volume and the largest deals the market has ever seen. It will be characterized by the public debut of institutionally mature titans, as well as totally disruptive, fast moving and capital consumptive innovators. Over the last decade, some companies have stayed private longer and raised unprecedented amounts of private capital, allowing a cohort of businesses to reach valuations and operational scale previously unseen in the private markets. We are no longer talking about “unicorns” — we are talking about global companies with the gravity and scale of Fortune 500 incumbents at the time they go public.  For investors, the reopening of the IPO window will enable an opportunity to invest in the most transformative and fastest growing companies in the world and a generational re-weighting of the public indices. 

In 2018, the five largest public tech companies were collectively valued at $3.3 trillion, led by Apple at ~$1 trillion. Today, the five largest public tech companies are valued at $18.3 trillion, more than five and half times larger.  Even more significant, the 10 largest private tech companies in 2018 were valued at $300 billion. Today, the 10 largest private tech companies are valued at $3 trillion, more than 10 times larger. These are iconic, generational companies with unprecedented private market caps some of which have unprecedented capital needs which should lead to an unprecedented IPO market. 

Each of these companies will have their own objectives on IPO timing, size and structure which will influence if, how and when they come to the market, but the potential across the board is significant. During the last IPO wave, Goldman Sachs was at the center of IPO innovation by leading the first direct listings and auction IPOs, and we expect more innovation with this upcoming wave. The current confluence of a constructive macro backdrop and groundbreaking technological advancements is doing more than just reopening the window; it is creating a generational opportunity for investors to participate in the companies that will define the next century of global business.

  • M&A activity exploded in 2025, are the markers there for another boom year?

As we enter 2026, the global M&A market has transitioned from a year of recovery ($5.1 trillion of M&A volume in 2025, up 44% YoY) to one that is bold and strategic. While the second half of 2025 was defined by a “thawing” — driven by a constructive regulatory environment, fed easing cycle and normalizing valuations — the year ahead will be defined by ambition. 

We have entered an era of broad, bold and ambitious strategic dealmaking: transformative, high-conviction transactions where industry leaders are no longer just consolidating for scale, but also moving aggressively to acquire the strategic assets, AI capabilities and digital infrastructure that will define the next decade. CEO and board confidence have reached a multi-year high, underpinned by the realization that in an AI-industrialized economy, standing still is the greatest risk of all. The quality and pace of strategic discussions that we are having with our clients signals that the world’s most influential companies — across sectors and regions — are ready to deploy their balance sheets and public currencies to redraw the competitive map. 

AI is no longer an isolated tech trend; it is a horizontal disrupter, broadening the appetite for strategic M&A across every sector of the economy. While the dialogue in boardrooms has moved from theoretical ‘AI pilots’ to large-scale capital deployment, the speed of technology is currently outpacing traditional governance frameworks. Boards and management teams are being asked to make multi-billion dollar, high-stakes decisions in a landscape where historical benchmarks often no longer apply. In this environment, M&A has become a tool for strategic leapfrogging — allowing companies to move both defensively to protect their core and offensively to secure the critical infrastructure and talent needed for non-linear growth. Success in 2026 will be defined by strategic conviction: the ability to turn this unprecedented complexity into a clear, actionable strategy and competitive advantage.

As AI continues to reshape corporate M&A strategy, we are also seeing financial sponsors return to the center of the M&A stage. Sponsor M&A activity accelerated sharply in 2025 — with M&A volumes surging over 50% as the bid-ask spread between buyers and sellers started to narrow, financing markets became more constructive and innovative deal structures enabled private equity firms to pursue larger, more complex transactions. With $1 trillion of global sponsor dry powder and over $4 trillion of unmonetized sponsor portfolio companies, the pressure for capital return to LPs has continued to escalate. Financial sponsors are entering 2026 with a dual-focus: executing take-privates and strategic carveouts to deploy fresh capital, while simultaneously utilizing reopened monetization paths – from IPOs to secondary sales to strategic sales — to satisfy demand for liquidity. With monetization paths reopening and valuation gaps narrowing, sponsors are entering 2026 with greater flexibility, reinforced by a healthier macroeconomic backdrop and improving liquidity conditions. 

This Q&A is based on an email conversation with Kim Posnett. This piece has been edited for length and clarity.



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