In recent months, a growing chorus of economists and commentators have sounded the alarm about the rise of two potentially catastrophic financial bubbles in the United States: artificial intelligence (AI) and cryptocurrency. As the stock market soars on the back of these technologies, a deeper look reveals that the underlying risks may threaten not just investors, but the broader economy and the very fabric of American society.
Robert Reich, a former U.S. Secretary of Labor and respected economic commentator, issued a stark warning on October 14, 2025. According to Reich, "two opaque industries are creating giant bubbles on the verge of bursting." He points to AI and cryptocurrency as the latest vehicles for speculative mania, drawing comparisons to infamous bubbles of the past—the dot-com crash of the 1990s, the housing collapse of 2006, and even the tulip-mania of the 17th century. Each, he notes, began with excitement and easy money, only to end in ruin for the many and windfalls for the lucky few.
The AI boom, in particular, has been breathtaking in its scale. The Bank of England recently described AI stock market valuations as "stretched," warning of a potential "sudden correction" in global markets. Major players—OpenAI, Anthropic, Nvidia, Microsoft, Google, Oracle, Amazon, Meta, and Musk’s xAI—have seen their market values skyrocket, mostly driven by what Reich calls "hope and hype." Shares connected to AI and its sprawling data center infrastructure now account for an estimated 75% of returns for America’s biggest corporations, 80% of earnings growth, and a staggering 90% of increases in capital expenditures.
Yet beneath the surface, the AI industry’s fundamentals are far less impressive. An MIT report cited by Reich found that 95% of companies experimenting with AI aren’t making any money from it. Despite this, investors have poured billions into the sector, with 37 states passing legislation to grant hundreds of millions in tax exemptions for building data centers. Meanwhile, the rest of the U.S. economy is showing cracks: factory construction and manufacturing investment have slowed, and the country has lost 38,000 manufacturing jobs since the start of 2025, according to the Bureau of Labor Statistics.
Even industry insiders are cautious. Amazon’s Jeff Bezos recently admitted, "When people get very excited, as they are today, about artificial intelligence, for example ... every experiment gets funded, every company gets funded. The good ideas and the bad ideas. And investors have a hard time in the middle of this excitement, distinguishing between the good ideas and bad ideas." It’s a familiar refrain to anyone who’s seen a bubble inflate—and burst—before.
The AI boom has also minted a new crop of mega-billionaires. Forbes reports that 20 of the most notable billionaires tied to AI infrastructure have added over $450 billion to their fortunes since January 1, 2025. Oracle’s Larry Ellison, for example, saw his wealth rise by $140 billion in a single year as Oracle’s shares jumped 73%—a leap fueled by expectations for AI-driven cloud revenue. Nvidia’s Jensen Huang gained $47 billion as his company’s stock surged 40% in 2025. But these windfalls have come at a cost: Oracle, for example, is now carrying more debt than ever, having issued another $18 billion in September 2025. S&P downgraded its outlook for the company to "negative" in July, citing concerns about free cash flow.
Cryptocurrency, the other bubble Reich warns about, is described as a "classic Ponzi scheme"—a financial product that, despite using massive amounts of energy, "doesn’t actually create anything." The surge in crypto’s value has been powered by the ultra-wealthy, with the Trump family reportedly earning $5 billion from crypto investments. The online brokerage Robinhood, which rode a wave of crypto trading and sports betting, saw its stock rise 284% in the year through September 2025 and joined the S&P 500 index. Had it been a member for the full year, it would have led the index, according to The New York Times.
The risks of a crypto collapse are not hypothetical. On Friday, October 10, 2025, a cryptocurrency selloff—triggered by former President Trump’s talk of a 100% tariff on China—wiped out more than $19 billion in crypto assets. Bitcoin dropped 12%, and the World Liberty Financial token, backed by Trump and his sons, fell by over 30%. The sharp downturn exposed the fragile underpinnings of the nine-month crypto rally, which began after the election of a Trump administration seen as friendly to the industry.
Both AI and crypto have provided a significant boost to the U.S. stock market, helping to mask deeper problems in the economy. Reich argues that these bubbles have "created the illusion that all is well with the economy—even as Trump has taken a wrecking ball to it." He points to policies such as raising tariffs, threatening China with punitive measures, sending federal troops into cities, mass deportations, firing federal workers, and even government shutdowns as evidence of economic mismanagement that has been papered over by speculative gains in AI and crypto.
Political power now appears tightly bound to the fortunes of oligarchs. As one analysis explains, the past decade and a half has seen the U.S. economy run for the benefit of oligarchs and their political allies—a fact not lost on ordinary Americans. The military-industrial complex, for example, draws its wealth from taxpayers, while Wall Street consolidated dominance after a $4 trillion bailout in 2009. Consumer capitalism, once a driver of broad prosperity, now finds consumers struggling to hold oligarchs accountable due to market concentration, information asymmetry, high switching costs, collective action problems, regulatory capture, and global supply chains that obscure accountability. In 2022 alone, the top 100 U.S. companies spent over $4.5 billion on lobbying to weaken regulations and secure favorable legislation.
Despite the challenges, there have been notable exceptions. The successful campaign against Tesla and Elon Musk—cited as a triumph of public protest and organization—demonstrated that concerted action can bring even the most arrogant oligarchs to heel. However, most oligarchs prefer to operate behind a wall of lawyers and PR professionals, avoiding public scrutiny while continuing to amass wealth and influence.
Reich’s advice to ordinary Americans is clear: "If you have savings, please make sure some are in low-risk assets such as money-market funds. As to your job, hold on." With the potential for a sudden correction in both AI and crypto, millions of Americans could see their savings and jobs threatened if the bubbles burst. The stakes, it seems, are not just financial—but deeply political and social as well.
As the U.S. stands at the intersection of speculative frenzy and economic uncertainty, the question remains: will the lessons of past bubbles be heeded, or will history repeat itself with even more devastating consequences?
