When the dot-com bubble burst in 2000, Amazon's stock lost about 90 percent of its value, falling from around $107 to near $6 a share. The company did not die — it became one of the biggest on earth. A company can be perfectly healthy while its stock falls off a cliff.
Now we appear to be in a new one: the AI bubble. A bubble is what happens when excitement drives the price of something — a stock, a house, once even a tulip — far above its real worth, until confidence cracks and it collapses. This time, though, the companies at the center are not flimsy websites; they are profitable giants — Amazon, Microsoft, Google, Meta, Nvidia — with other businesses to lean on. But two things are different this time, and both point back at ordinary people.
The first is the sheer bill. The five biggest tech companies are expected to spend more than $700 billion on data centers and AI in 2026. For years they paid out of pocket; now the sums are so big they are borrowing — a record $121 billion in 2025, about four times their usual pace, according to Bank of America.
The second is where that bet sits. Those same companies now make up more than a third of the S&P 500, the index behind most retirement accounts, according to Morningstar. At the dot-com peak, tech was closer to 15 percent, and when it crashed, most of the market held up. This time the market and the AI bet are nearly the same thing.
So the real danger isn't that Amazon or Meta goes under. It is that a healthy company's stock can still tumble for years — and if a third of your retirement fund rides on seven companies' spending spree, it goes along, whether you chose that or not. The boring index fund, it turns out, has a lot of chips on the table.
Rick Good spent ten years in the newspaper business, including with The News & Observer (Raleigh, NC) and The Greenville News (Greenville, SC). He co-wrote, with Melinda Coleman, Rutledge to Riley: Governors of South Carolina, 1776–Present (Published by The Greenville News), and is the author of Mind Games Trivia #1 (Amazon). He has recently spent 15 years creating original trivia content through Sounds Good Mobile Entertainment and continues that with his new company, SGME Software. He edits The Smart Reader’s money, real estate, and business coverage.