The American economy is putting all its energy on artificial intelligence

When Nvidia became the world’s first $5 trillion company this week, the milestone underscored just how much AI has taken over the economy. The chipmaker, along with six other major technology companies, makes up nearly a third of the entire stock market.

Nvidia’s market cap is 7% of all 3,265 publicly traded US companies tracked by Marketcap.com. When you add Nvidia to the other six largest companies by market cap — Apple, Microsoft, Alphabet, Amazon, Broadcom, and Meta, all of which are heavily involved in AI — it makes up 32% of the total stock market value. Nvidia’s value has risen because it makes chips that expand artificial intelligence.

The statistic highlights the extent to which the future of the American economy is now invested in the success of artificial intelligence technology. While the stock market is not exactly the same as the economy, the high concentration of investment in AI is evident in other numbers as well.

Companies are pouring money into AI on a massive scale: Silicon Valley plans to invest $400 billion in the technology this year, according to The Wall Street Journal. In the first half of 2025, investment in computer equipment accounted for 92% of GDP growth, according to an analysis by Harvard economics professor and former Obama economic adviser Jason Furman.

AI developers say the technology promises to spur a world-changing increase in productivity and wealth. However, as more and more eggs are added to the AI ​​ecosystem basket, concerns have been growing about the possibility of a bubble.

With so many bets concentrated in such a narrow space, more economists are speculating about the potential damage to the broader economy if technology fails to live up to the hype and the market collapses. These concerns have intensified as AI companies become increasingly involved in complex and circular multi-billion-dollar deals with each other.

To be sure, many experts don’t view AI as a dot-com-like bubble. Federal Reserve Chairman Jerome Powell dismissed that comparison this week when he spoke to reporters at a news conference, saying today’s AI darlings are far more solid business propositions than their dot-com predecessors.

“This is different in the sense that these highly valued companies actually have earnings and things like that,” Powell said.

However, if Powell and others are wrong, a market collapse on the scale of the dot-com bubble collapse could be more devastating in today’s economy than it was a quarter century ago.

A dot-com-like explosion would wipe out $20 trillion in American household wealth, Gita Gopinath, former chief economist at the International Monetary Fund, wrote in The Economist this month. With trade wars fueling uncertainty and the US government saddled with a mountain of debt, the economy may be less able to recover than it was at the turn of the millennium.

“Today’s market crash is unlikely to lead to the short and relatively benign economic downturn that followed the dot-com crash,” Gopinath wrote. “We must prepare for more serious global consequences.”