The Nasdaq Composite lost more than $1 trillion in market value over the span of a few days last week, and the word nobody in tech wants to hear is making the rounds again: bubble.
Between June 23 and June 26, the index dropped approximately 2.2% to 2.5% as investors reconsidered whether the AI-fueled rally that has dominated markets for the better part of two years still has legs. Chip stocks were hit especially hard, falling 5.3% in a single session.
The S&P 500’s price-to-sales ratio now sits at 3.22, which is nearly 75% above its long-term average of 1.84. The Buffett Indicator, which measures total market capitalization relative to GDP, hit 218% in the first quarter of 2026.
The AI spending problem
Morgan Stanley estimates that AI-related corporate borrowing could exceed $500 billion by the end of 2026. Companies like Nvidia, Microsoft, Alphabet, Broadcom, and Micron are pouring capital into data centers, chips, and infrastructure at a pace that makes the fiber-optic buildout of the late 1990s look quaint.
