Private Market Trading Update Post Midterms

The past week has been, if nothing else, volatile. Wednesday’s post-midterm rally, which saw the DJII +3%, S&P 500 +2%, and the Nasdaq 100 +1%, was followed by a sharp reversal on Thursday (-3%/-4%/-6%) on renewed concerns around AI valuations and data-center spending. The Democratic sweep of Congress^*1 initially eased political uncertainty and raised expectations for greater policy gridlock, while the steep decline in oil prices helped temper inflation concerns. WTI crude fell to $91/bbl (vs. $104 a week ago) and the 10-year Treasury yield moved modestly lower to 4.8%. But then AI-related stocks, particularly semiconductor and datacenter names, came under renewed pressure, highlighting the growing divide between established technology leaders and more speculative AI infrastructure companies. Broader equities also weakened in Thursday’s selloff, underscoring the market’s sensitivity to political developments, interest rates, energy prices, and the sustainability of AI-driven investment. For the week, the DJII/S&P 500/NDX were -1%/-3%/-6%. Our NPM Private Market Tracker, which shows the average price performance of the 50 largest names in our internal NPM Price data, is +105% YTD vs. S&P 500/Nasdaq 100 +7%/+5%. (Bloomberg; NPM)

The private secondary market has performed strongly YTD, continuing the momentum that began in 2025, during which our private market index was +55% vs. +18%/+21% for the S&P 500/Nasdaq 100. By our measures, private markets have again handily outperformed public markets YTD. Our NPM Private Market Tracker, which is based on our proprietary NPM price data, is +105% through 11/4 vs. the S&P 500/Nasdaq 100 at +7%/+5%. As the chart below shows, the outperformance of private markets was accelerated by the war with Iran, which began 2/28, and led to a meaningful public market pullback. In addition, the recent selloff in public technology equities has exacerbated the performance differential. (Bloomberg; NPM)

Source: Bloomberg; NPM

1. 01
   We would note that 2025/26 is almost a complete mirror image of performance in the 2023/24 timeframe. From 2024-2025, private markets underperformed the S&P 500 by a massive 61%. In 2024, for example, our NPM Private Market Tracker returned just +14% vs. the S&P 500/Nasdaq 100 at +24%/+29%. (NPM; Bloomberg)
2. 02
   Demand for cap table access at leading private companies has intensified considerably. The market has become increasingly polarized, with a handful of elite AI and technology infrastructure companies commanding significant valuation premiums, while many traditional software, fintech, and consumer technology companies continue to trade below their previous high water marks. Through 11/4 the top 50 names in our market by enterprise value were +105%, but the top 100 names average was +95%, suggesting “just” a +85% average return for names 51-100.
3. 03
   The IPO market has continued its gradual reopening in 2026, although activity remains highly selective. Although the IPO window has improved materially compared with conditions prevailing in 2022-25, activity has recently slowed to a trickle. For example, Oura, a highly anticipated consumer wearables IPO, postponed its IPO on 9/29 due to market conditions^*2. SpaceX, the IPO that was expected to fully reopen the market, now trades 9% below IPO price. The expected listing of Anthropic is the next event to punctuate the IPO market^*3.
4. 04
   The recent selloff in AI/tech equities has exacerbated the performance gap between private and public markets. Public investors can adjust exposure quickly. Private investors cannot.

Performance by Sector During YTD2026

The chart below shows performance by industry sector within private markets for YTD26. Industrials (inc Defense), driven by Hadrian (+481%) and Castelion (+329%), was the biggest gainer at +164%. AI, led by inference player Modal Labs (+879%), was second at +143%, followed by Consumer (Whoop +176%) at +106%. Healthcare, which includes both Neuralink (+239%) and OpenEvidence (+143%), rounds out the top 4 at +74%.

Strong returns in private markets were largely driven by a small number of names that did capital raises at dramatically higher valuations. Among the 100 largest names in our market the best performers in YTD26 were Valor Atomics (+1292%), Modal Labs (+879%), Prometheus (+564%), Hadrian (+481%) and Sambanova (+415%).

A Quick Note on the Public Markets

While our focus is private markets, we do not entirely cast a blind eye to what is occurring in public equities. The AI-driven equity market rally peaked on 10/6/26, when the Nasdaq 100 reached a record high of 31,224 and the S&P 500 also established a new closing high, before a sharp reversal in sentiment triggered a technology-led selloff. By 10/30, the Nasdaq 100 was -8%, and the S&P 500 was -3% from its peak. The divergence underscored the extent to which the selloff was concentrated in technology and AI stocks: the S&P 500 technology sector fell 7% during October, its worst monthly decline since 3/25, while the broader S&P 500 lost less than 1%.

The initial catalyst was a series of earnings reports that exposed the growing tension between AI infrastructure spending and near-term cash generation. Meta fell 7% on 10/22 after raising its 2026 capex outlook to $135–145bn and reporting substantial cash outflows. Alphabet subsequently suffered a record single-day decline after disappointing search advertising results, negative free cash flow of $9.1bn^*4 and indications that 2027 capex would increase from its already aggressive $195–205bn 2026 forecast. Amazon added to the pressure by also increasing capex after reporting a sharp cash outflow. Finally, Intel fell ~29% on 10/30^*5 after warning of cash burn driven by manufacturing challenges, a weak PC market and heavy investment requirements. The resulting selloff extended across the AI/semiconductor complex, with chip makers Nvidia and AMD falling sharply, and AI infrastructure providers such as CoreWeave and Nebius following suit.

The market’s reaction has not been uniformly negative, however: Microsoft rallied following results showing Azure growth of 48% and $18.6bn in free cash flow, demonstrating that investors are increasingly distinguishing between companies successfully monetizing AI demand and those still funding the infrastructure buildout.

Private Markets Post Midterms

The 2026 midterm elections clearly introduce a new political variable into an already complicated private market investment environment. Democratic gains in Congress increase the probability of legislative gridlock and raise the prospect of more aggressive oversight of technology, energy, healthcare, and financial services. In short, investors must now underwrite a wider range of regulatory and fiscal scenarios.

For private markets, the election arrived at a particularly consequential moment. The private company ecosystem is being reshaped by the extraordinary capital requirements of AI, a growing divergence between “haves” and “have nots” in the venture funding arena, and continued constrained exits.

Our initial view is that the election alone is unlikely to produce a broad-based repricing of private companies. Private investors cannot rebalance quickly. However, the midterms, in our view, should reinforce an already selective market, in which valuations increasingly diverge based on profitability, capital intensity, regulatory exposure, and the availability of credible liquidity. Furthermore, the election itself is unlikely to determine whether the IPO window opens, but at the margin the specter of greater political uncertainty makes us a bit more cautious on the IPO outlook.