Experts predict these stocks could crash if AI bubble pops

AI bubble fears are rising

Talk of an artificial intelligence bubble is growing louder across Wall Street. Valuations are soaring, spending is accelerating, and companies are racing to build massive AI data centers at record speed. For many investors, the situation feels uncomfortably similar to past tech manias.

While some believe this time is different, others argue that current trends are unsustainable. If AI demand slows even slightly, stocks tied to heavy borrowing and concentrated customers could face serious pressure.

Echoes of past tech bubbles

Comparisons to the year 2000 are becoming harder to ignore. Companies are spending eye-watering amounts on infrastructure, betting that future AI demand will justify today’s massive investments. History shows that optimism can flip quickly.

When bubbles burst, the most vulnerable firms are often those with high debt and narrow revenue sources. The current AI boom has created several companies that fit that risky profile.

Debt fueled AI expansion risks

Building AI infrastructure is expensive, and many companies are turning to debt markets to fund growth. Borrowing can accelerate expansion, but it also magnifies losses if revenue expectations fall short.

In a cooling market, rising interest costs and tightening credit can quickly overwhelm companies that stretched too far during boom times.

Oracle goes all in

In the latest quarter, Oracle reported a very large year-over-year increase in capital expenditures and raised fiscal 2026 capex guidance to roughly $50 billion, well above analyst expectations.

The company now expects to spend about 50 billion dollars in fiscal 2026, a sharp increase from earlier projections. That scale of investment increases leverage and raises questions about free cash flow coverage and rating agency outlooks if revenue does not scale as quickly as planned.

Oracle borrowing raises alarms

Oracle does not generate enough cash flow to fund its AI buildout on its own. As a result, it has leaned heavily on debt markets, including an 18 billion dollar bond sale.

Some Oracle bonds traded at yields comparable with high-yield paper, even while major ratings agencies continued to list Oracle as investment grade with negative outlooks.

Credit risk signals flash

Oracle’s five-year credit default swap spread has widened materially since September and is near its highest levels in more than a decade, a sign that credit markets are pricing higher default risk.

Prices are now near levels last seen during the global financial crisis, signaling rising concern among credit investors.

This spike reflects fears that aggressive borrowing tied to AI spending could strain the company if conditions change or large customer commitments weaken.

OpenAI dependency worries investors

A major concern is Oracle’s reliance on a single customer. OpenAI has committed to spending 300 billion dollars over five years on Oracle’s services, making it one of the largest customer bets in the company’s history.

That commitment comes from a company that remains unprofitable and continues to burn cash, raising questions about long-term sustainability if funding slows or strategic priorities change.

OpenAI spending gap problem

OpenAI’s annualized revenue is only a fraction of what it has agreed to spend each year with Oracle. That gap means continued fundraising will be required to support long-term commitments.

If capital markets tighten, Oracle could be left exposed to a customer unable to meet massive obligations, increasing financial risk despite strong demand for AI infrastructure.

CoreWeave growth hides danger

CoreWeave has delivered explosive revenue growth as demand for AI data centers surged. Over the past year, revenue has tripled, drawing investor attention and helping position the company as a major player in AI infrastructure.

However, that growth has been fueled by heavy borrowing, creating a fragile financial structure beneath the surface that could quickly become strained if market conditions shift.

CoreWeave debt load swells

CoreWeave’s filings and market reports show heavy leverage with total borrowing and long-term lease commitments in the low to mid-teens of billions of dollars, depending on methodology, a multiple that is several times last year’s revenue, according to reported figures.

The scale of that leverage leaves little margin for error if AI demand cools, customer spending slows, or financing conditions tighten further.

Interest costs eat revenue

CoreWeave paid 311 million dollars in interest last quarter alone. That expense has surged sharply year over year, reflecting its aggressive borrowing and rising rates across credit markets.

Interest costs now consume more than a fifth of revenue and far exceed gross profit, increasing financial stress and limiting flexibility as the company continues scaling its AI infrastructure.

Customer concentration adds risk

Nearly all of CoreWeave’s revenue comes from a very small group of customers, with major hyperscalers like Microsoft playing an outsized role in its business.

The risk goes deeper because those same customers are also direct competitors. Hyperscalers have strong incentives to shift AI workloads back in-house as their own data center capacity expands.

If that happens, CoreWeave could face sudden revenue pressure, even if overall demand for AI computing remains strong.

Curious about the risks involved? See why OpenAI is warning about new AI browser attacks that may persist.

High risk stocks face reality

If this is a bubble, history suggests some companies will survive and thrive after it bursts. Strong balance sheets and diversified customers matter. Others that relied on heavy debt and narrow bets may not recover as easily.

The AI boom has created enormous opportunities, but it has also amplified financial risks. Oracle and CoreWeave sit at the center of those concerns.

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This slideshow was made with AI assistance and human editing.

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