OpenAI era pushes old-school stock analysts into private markets

The growing clout of private companies like OpenAI is causing Wall Street to redraw the boundaries of its equity research business.

Morgan Stanley last week launched a dedicated product to cover closely held firms, joining rivals including JPMorgan Chase & Co. and Citigroup Inc. in expanding coverage of private assets. The banks are aiming to capture the potential impact of unlisted competitors of the stocks they follow, as well as to sate a relentless investor appetite for insights into their performance.

“The demand from clients is huge,” said Anne Malone, head of US equity research at Citigroup, which hired Balyasny Asset Management alum Heath Terry to lead coverage of the heavily private technology sector. “Everyone wants to hear about private companies for one of two reasons. One, they want to invest in them. Or, you want to know about it because they might be a threat to your investments.”

Expanding private-asset research comes with challenges, from taking on industry incumbents to figuring out how to monetize insights. Yet as more companies choose to stay private for longer — throttling the supply of new stocks and increasing the importance of unlisted firms in one swoop — it’s seen as an essential move for a business already battling shrinking budgets, onerous regulation and the shift toward passive investing.

It may even offer old-school analysts a bulwark against the impending threat of AI, since private-company research can’t be easily replicated by machines.

At UBS Group AG, coverage of private companies is one of the top initiatives for 2026, according to Jim Van-Tassel, head of Americas equities research. The bank has already profiled about 1,400 unlisted firms, and has created a network with more than 2,400 entrepreneurs who attend corporate events and conferences, and whom it can connect with institutional investors.

“The sell side has an opportunity to step up and be a much more important partner for investors that are looking into private assets,” Van-Tassel said.

Adding Value
Private companies are too big to ignore, with nearly 1,600 globally boasting a valuation of $1 billion or more, according to data compiled by PitchBook. These firms were worth a combined total of about $6.5 trillion as of Nov. 5, a 22% increase from the end of last year. Two of them — OpenAI and Elon Musk’s SpaceX — have valuations that would place them among the 25 largest companies in the S&P 500.

“It matters because they’re sizable enough to invest in, but they’re also sizable enough to create competition for your current investments,” said Malone.

As well as leading Citigroup’s AI coverage, Terry will guide other analysts to research private firms in their own industries. The bank has a list of roughly 100 large and influential companies it will focus on, and will publish reports on those firms when they do something particularly relevant to broader markets.

For its private-company research, JPMorgan has built a small team of specialists to supplement its existing analysts in AI and fintech.

The bank kicked off coverage this year with a report on OpenAI, which has been at the heart of numerous major share moves, including triggering huge rallies for Advanced Micro Devices Inc. and Broadcom Inc. by agreeing to buy their semi-conductors. Meanwhile software stocks have struggled this year, partly on fear of how companies like OpenAI will disrupt their industry.

“The vast majority of the readers of our content are public market investors,” said Hussein Malik, JPMorgan’s head of global research. “The feedback we got was that these companies are very relevant to the public stocks that they cover.”

Private-company analysis offers research desks a rare avenue of growth after several difficult years. Tougher regulations and the shrinking active fund industry have hit the business hard, while the number of domestic firms listed in the US has slumped to around the lowest level in four decades.

The challenge will be proving their worth against the likes of Bain & Co. and McKinsey & Co., which already help private equity buyers find targets, and demonstrating the knowledge to rival specialists such as Gerson Lehrman Group, which connects investors with industry experts.

“Without public disclosure and standardized metrics, research output can slide into storytelling or corporate marketing,” said Ludovic Phalippou, a professor of finance and economics at the University of Oxford’s Said Business School. “Sell-side analysts must prove they add marginal value, not just echo management.”

To that end, Barclays Plc’s coverage of fast-fashion retailer Shein Group Ltd. utilized its own US credit card data. JPMorgan’s initiation of fintech firm Plaid Inc. pulled more than a dozen expert and customer quotes from third-party platforms. Morgan Stanley’s report on Musk’s Neuralink featured interviews with its co-founder and competitors.

Banks are also beefing up their corporate-access offerings. Citigroup’s global technology, media and telecommunications event in September included representatives of 47 private companies compared with 21 last year. Morgan Stanley’s Spark Private Company Conference included leaders from 85 tech firms this year, up 35% from 2024. Barclays analysts connected investors with 966 private firms last year and nearly 900 in the first nine months of 2025.

“Clients want to understand not just from us in writing why these companies are relevant, they want to understand from them why they’re relevant and why they’re going to take market share,” said Bradley Rogoff, global head of research at Barclays Investment Bank.

Limited Headcount
Private-company research doesn’t necessarily link to a public security that clients can easily trade, meaning banks may not earn commission directly tied to their work. Perhaps that’s why not every institution is rushing to analyze unlisted firms, and why those which are have generally only made modest investments to do so.

While JPMorgan is running a team of five and UBS hired one analyst focusing on private tech and another covering health care, banks are typically putting more emphasis on asking current sector analysts to monitor unlisted companies. Morgan Stanley, for example, converted two of its previous public equity analysts to private company coverage.

“The relatively new coverage of private companies hasn’t yet led to a significant increase in research headcount,” said Daniel Smith, a headhunter at Sheffield Haworth. “At present, the private companies of interest are, for the most part, being covered by the traditional public equity research teams. This confirms that the line between public and private markets is blurring.”

It represents a change of pace for analysts more used to parsing financial statements, monitoring prices and predicting earnings beats and misses each quarter. They’ll be covering companies without reliable price data and with few if any periodic reports. Some insights will rely on access to company executives, while others may involve fieldwork such as collecting data from customers or investigating supply-chain partners.

“It’s much harder,” said Citigroup’s Malone. “You have to piece it together. It’s not nearly as organized and structured as public company filings are.”

That may be no bad thing, as AI tools threaten to take over the job of fundamental equity analysis. Computer programs will struggle to replicate much human intelligence-based research.

Meanwhile, many banks see research on private entities as vital to help ensure they win a bigger share of client budgets during so-called broker votes, when buy-side institutions decide internally which providers they’ll use and how much compensation each receives.

“Research isn’t typically direct monetization — it is through the feedback loop that we get from our clients,” said JPMorgan’s Malik. Private-market insights are a unique value-add and “our expectation is that, over time, our clients will recognize that,” he said.