"Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla now make up more than a third of the S&P 500, more than twice the level seen before the dot-com bust. AI-related capital spending has outpaced the U.S. consumer as the main driver of gross domestic product growth. OpenAI alone plans trillions in data-center investments while exiting 2025 with about $20 billion in annualized revenue."
"On top of this is a web of circular financing among major players. Companies are using complex structures to fuel the investment wave, adding opacity and risk. Investors like Masayoshi Son and Michael Burry are heading for the exits. In a new Bank of America survey, 45% of investors cite an AI bubble as the top tail risk for the economy and markets. Many believe AI stocks are already in bubble territory."
Market concentration has risen sharply, with seven major tech firms accounting for over a third of the S&P 500, more than twice pre-dot-com levels. AI-related capital spending has become a primary driver of GDP growth, driven by plans for massive data-center investment and sizable revenue projections. Data-center expansion faces physical constraints in energy, land, and skilled labor. Circular financing among large players increases opacity and systemic risk, and a large share of investors view an AI bubble as a top tail risk. A bubble burst would force a reset; sustained progress requires real, diffused growth.
Read at Fast Company
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