Artificial intelligence has become the poster child of Wall Street euphoria. Headlines tout it as the engine of a “new economy,” sending valuations to stratospheric levels.

Investors are chasing the next big breakthrough, convinced AI will power endless growth. But beneath the glow, serious cracks are forming. Veteran bankers and leading institutions warn that this surge may not last.

And analysts say it’s showing all the classic signs of a bubble, with valuations inflated far beyond the strength of the underlying businesses. The parallels to past manias, from the dot-com craze to the housing boom, are getting harder to ignore.

Risk Detected

At first glance, everything looks great. U.S. markets have surged to repeated highs, fueled by hype around AI and its supposed productivity revolution. JP Morgan reports that AI-related stocks have driven 75% of S&P 500 returns and 90% of capital spending growth since ChatGPT hit the market in 2022. The Nasdaq 100 is up 18% this year alone, trading at a forward P/E ratio of 28, well above its decade-long average of 23.¹

But experts are starting to see thru the hype. Bank of America surveys show a record number of fund managers believe AI stocks are in a bubble. Jamie Dimon, CEO of JPMorgan Chase, admits he is “far more worried than others” about a correction in the next two years. Goldman Sachs CEO David Solomon warns, “a lot of capital was deployed that doesn’t deliver returns.” Jeff Bezos calls it “an industrial bubble.” And OpenAI’s Sam Altman himself said, “people will overinvest and lose money.”²

AI spending is now the main driver of U.S. economic growth this year, even outpacing consumer spending. Deutsche Bank estimates that without AI-related expenditures, U.S. GDP growth would nearly flatline.

Borrowed Money, Borrowed Time

Here’s the hard truth: most AI companies aren’t profitable. They survive on debt and repeated equity sales, inflating their market value without generating real earnings. Deutsche Bank calculates $1.2 trillion in debt has already been accumulated by AI-related firms. There’s now more so-called “high-grade” debt tied to AI than to America’s biggest banks. At the current pace, that could hit $1.9 trillion within a year.³

Leverage like this is a disaster waiting to happen. Bank of England, the IMF, and JPMorgan all warn that any reevaluation of these AI-tied securities, especially triggered by interest rate changes, could freeze cash flows. Bankruptcies or bailouts would follow, and trillions in market value could evaporate, echoing 2008’s meltdown.

Overconcentration risk compounds the danger. Five companies: Nvidia, Microsoft, Apple, Amazon, and Meta, now account for 30% of the S&P 500’s valuation, the most concentrated it’s been in half a century.

As does the rise of "circular financing deals" like Nvidia and OpenAI’s $100 billion chip arrangement. OpenAI also owns a stake in AMD, Nvidia is investing heavily in OpenAI, and both rely on Microsoft, which accounts for nearly 20% of Nvidia’s revenue.⁴

Data-center investments have tripled since 2022. OpenAI projects it will need $1 trillion in infrastructure despite expected revenues of just $13 billion. Venture capital has poured nearly $200 billion into AI startups this year alone. Yet an MIT study found 95% of 52 organizations saw zero returns on AI spending. If AI fails, most of this could be lost, sunk costs with no hope of recovery.⁵

History Doesn’t Lie

The dot-com bubble offers a clear lesson. From 1995 to 2000, the Nasdaq soared 600% before collapsing 78%. The same question faces AI investors today: it’s not whether the technology works, it’s whether the money being spent matches real-world profitability.⁶

How to Protect Yourself

If the AI bubble bursts, investors could see trillions erased. Gold remains one of the most reliable hedges against financial instability.

Safe Haven and Portfolio Insurance:
When speculative bubbles collapse, investors flee to stability. Gold has historically risen following major market corrections as seen after both the dot-com and 2008 crashes.

Diversification and Downside Protection:
Experts often recommend holding 5–10% of portfolios in gold or gold-related assets. Some now recommend double that amount. Because gold moves independently of stocks and bonds, it offsets losses during downturns.

Inflation and Crisis Hedge:
Gold’s limited supply and intrinsic value make it an effective shield against inflation and currency devaluation. During the 2008 crisis, gold prices climbed while equity markets tumbled.

Gold does not generate income, but its strength lies in long-term preservation. Analysts expect prices could exceed $5,000 an ounce if AI optimism fades.

Conclusion

The AI revolution is real. But revolutions are rarely orderly. Investors ignoring the bubble risk could see massive losses. Physical gold, held in a Gold IRA, can shield your retirement from the fallout. Don’t wait for the next correction, protect your wealth now. Call American Hartford Gold at 800-462-0071 to learn how a Gold IRA can safeguard your future.

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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.

Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.

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Notes:

1. https://www.bloomberg.com/news/articles/2025-10-14/most-investors-say-ai-stocks-are-in-a-bubble-bofa-poll-shows

2. https://insights.som.yale.edu/insights/this-is-how-the-ai-bubble-bursts

3. https://wlockett.medium.com/ai-just-had-its-big-short-moment-714e143dabfa

4. https://insights.som.yale.edu/insights/this-is-how-the-ai-bubble-bursts

5. https://insights.som.yale.edu/insights/this-is-how-the-ai-bubble-bursts

6. https://arstechnica.com/ai/2025/10/bank-of-england-warns-ai-stock-bubble-rivals-2000-dotcom-peak/