According to Reuters, the wealth effect brought about by the IPO of SpaceX in June and the listing of AI companies is changing the luxury consumption patterns of newly wealthy people in the United States. UBS data shows that there were 440,000 new millionaires in the United States last year; at the same time, SpaceX raised US$85.7 billion in its IPO in June, with the company valued at US$1.77 trillion.
According to reports, Chip, a data scientist who once worked at SpaceX, currently holds about $3.5 million in SpaceX stock. After the company went public, he recently purchased meteorites worth $10,000 and a fire truck worth $5,000, saying that these purchases were more out of personal interest. He is also considering purchasing a TAG Heuer Carrera Caliber 1887 SpaceX Chronograph watch, which costs about $8,000 and is inspired by NASA astronaut John Glenn’s 1962 flight around the Earth.
However, there is still uncertainty about whether the wealth-creating trend of technology and AI can bring a new round of growth to the global luxury goods industry. Federica Levato, a partner at Bain & Company, said the luxury goods industry is competing with more and more industries for the consumption budgets of the newly wealthy.
Research released by Bain last month showed that the global personal luxury goods market will be 358 billion euros (approximately US$406 billion) in 2025, and has continued to shrink in the past two years. Against the backdrop of a weak Chinese market and pressure on global consumer confidence, some fashion brands are looking to U.S. technology upstarts to become a new source of growth.
Looking at regional performance, the North American market still provides support for some luxury goods groups. In the quarter ended March 31, North America was one of the fastest-growing markets for LVMH, Richemont, Hermès and Kering Group's Gucci. Richemont CEO Nicolas Bos told analysts in May this year that the high level of U.S. consumer confidence has driven sales performance.
However, the consumption preferences of the new generation of technology tycoons are not entirely consistent with those of the traditional wealthy class. Zack Kass, an AI strategist who once led the OpenAI commercialization team and holds shares in SpaceX, said that he used his earnings from OpenAI to purchase a professional volleyball team. According to reports, technology practitioners remain interested in products such as smart watches in terms of experience, health and sports-related consumption.
Robert, an engineer who once worked at SpaceX, said that his stock holdings are worth about US$4 million. He and his wife recently purchased a new Apple Watch and plan to continue investing most of their new wealth after their Alaska cruise.
Traditional high-end watches still have a certain appeal. Harrison Colcord, founder of Harrison Lifestyle Concierge, believes that smart watches cannot completely replace traditional watches in formal occasions. The Federation of the Swiss Watch Industry said in January this year that the United States will be the largest destination market for Swiss watches in 2025, accounting for 17% of global exports.
In contrast, clothing and leather goods brands face more direct competition. Filippo Bianchi, head of the Boston Consulting Group's global luxury goods team, said that compared with people with family wealth, the newly wealthy spend about one-third less on formal clothing and leather goods, and they prioritize the allocation of durable assets such as real estate, yachts and cars.
Chip also said that except for possibly upgrading his outdoor clothing, he has no plans to buy luxury clothing. He said that he has been accustomed to wearing T-shirts and shorts for many years, and the last time he bought a jacket was at the second-hand store Goodwill.