Six months ago, the same companies now scrambling for cash were buying back their own stock. That was the sign of excess. Now they borrow.
The shift is stark — and it has nothing to do with optimism. The $18 trillion market value of Wall Street’s five biggest tech firms roughly equals China’s entire economy.
That number alone makes investors nervous. But the real worry sits underneath: the debt pile financing the artificial intelligence buildout is growing, and the Federal Reserve has floated raising interest rates. That combination could turn a manageable expense into a crushing one.
Brent Fredberg, director of investments at Brandes Investment Partners, called the current borrowing “relatively modest.” He also noted that a rate hike would make that debt “a lot more painful.” Modest today. Painful tomorrow.
That is the window investors are watching. SpaceX, fresh off a blockbuster IPO, announced plans this week to issue $25 billion in bonds. The market reacted immediately — its share price dropped.
Doubts about its financial health surfaced. A space and AI giant, valued in the trillions, now needs to borrow to keep building. That is not a sign of strength.
Itay Goldstein, a finance professor at the Wharton School, put it plainly: “There are many indications that we are in a bubble.” He added that “overpricing” looks likely. When a Wharton professor calls a bubble, Wall Street tends to listen.
The risk is not just that prices fall. It is the structure underneath. Analysts warn about “circular financing” — big tech companies invest in AI startups, and those startups use the cash to buy the big tech companies’ products and services.
Fredberg said this “can lead to problems down the road.” Money goes in a loop. When the loop breaks, everyone feels it.
The scale is what makes this different. Past bubbles — dot-com, housing — were large. This one wraps the five biggest companies on the planet.
Their combined value rivals a national economy. A bust would not be a correction. It would be a restructuring of global capital.
Some experts warn the fallout could be bigger than anything Wall Street has ever seen. That is not hyperbole.
It is arithmetic. When the biggest players are all in the same game, and that game is funded by borrowed money and circular deals, the exit door gets narrow. Investors are already getting nervous.
The recent swings in tech stocks are reviving fears that were dormant six months ago. Back then, the same companies were buying back shares — a move that signals confidence and excess cash.
Now they take on debt. That reversal is not subtle. It is a signal that the easy money is gone.
What is being done to prevent a bust? Not much. The Federal Reserve could hold off on rate hikes.
Companies could slow their AI spending. But the machine is already running. $18 trillion in market value does not unwind quietly.
The question is not whether the bubble exists. The question is what happens when it pops. And the answer, based on the numbers and the warnings from people like Goldstein and Fredberg, is that nobody really knows.
But they are bracing.
