Key Points
- Nvidia becoming a $5 trillion company highlights AI’s growing dominance in the economy and stock market.
- Nvidia and six other major tech companies (Apple, Microsoft, Alphabet, Amazon, Broadcom, Meta) now account for 32% of the U.S. stock market’s total value.
- Massive investments in AI infrastructure (e.g., $400 billion planned for this year) are driving significant growth in computer equipment sales.
- While AI promises productivity and wealth, the high concentration of investment and complex deals raises concerns about a potential “AI bubble”.
When Nvidia became the world’s first $5 trillion company this week, it truly highlighted how much artificial intelligence (AI) now controls the economy. This chipmaker, along with six other major tech companies, now accounts for nearly a third of the entire stock market.
Nvidia’s market value alone is 7% of the total market value of all 3,265 publicly traded U.S. companies. Add Nvidia to the other top six by market value—Apple, Microsoft, Alphabet, Amazon, Broadcom, and Meta—all heavily involved in AI, and they account for a staggering 32% of the stock market’s total worth. Nvidia’s value has shot up because it makes the chips that power the AI boom.
These numbers clearly show how much the future of the U.S. economy now depends on the success of AI technology. While the stock market isn’t the same as the entire economy, other figures also reveal the high concentration of investment in AI.
Companies are pouring massive amounts of money into AI: 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 the GDP growth, according to an analysis by Harvard economics professor Jason Furman, a former Obama economic advisor.
The stock market’s heavy focus on AI could bring huge rewards for investors if the technology lives up to its hype. However, it risks severely damaging the economy if it doesn’t.
AI developers promise that the technology will create a world-changing surge of productivity and wealth. But as more and more investment is concentrated in the AI world, concerns about a potential “bubble” have grown louder.
With so many bets placed in such a narrow field, more economists are wondering about the potential harm to the wider economy if AI doesn’t deliver and the market crashes. These concerns have increased as AI companies have become increasingly entangled in complex, circular multi-billion-dollar deals with one another.
To be fair, many experts don’t see AI as a dotcom-like bubble. Federal Reserve Chair Jerome Powell dismissed this comparison this week, telling reporters that today’s AI darlings are much more solid businesses than the dotcom companies of the past.
“This is different in the sense that these companies that are so highly valued actually have earnings and stuff like that,” Powell said.
Still, if Powell and others are wrong, a market crash as big as the dotcom bubble collapse could be far more damaging to today’s economy than it was a quarter-century ago.
A dotcom-like failure would wipe out $20 trillion of wealth for American households, wrote Gita Gopinath, former chief economist at the International Monetary Fund, in The Economist this month. And with trade wars causing uncertainty and the U.S. government burdened by massive debt, the economy might not bounce back as easily as it did at the turn of the millennium.
“A market crash today is unlikely to result in the brief and relatively benign economic downturn that followed the dotcom bust,” Gopinath wrote. “We should prepare for more severe global consequences.”
