What Could Pop The AI Bubble And Which Stocks Stand To Lose

The AI boom is going to go bust, reports The Wall Street Journal. But this leaves open questions such as what will cause it, how likely each risk is — and, if it happens, when and which stocks will be hit and by how much.

My guess is that the combination of higher interest rates and an abrupt change in capital-provider attitude — from fear of missing out to fear of not getting paid back — will be the reasons the AI bubble bursts.

Should that happen, there will be winners and losers. The losers will be indebted neoclouds and AI data center builders including CoreWeave, Oracle and SoftBank. Nvidia and memory makers might also suffer — however, those with little debt will not be hurt as badly. Finally, power equipment suppliers such as GE Vernova and cybersecurity firms could benefit from an AI bust.

Read on for a list of risks that could cause the AI bubble to burst and which stocks could be affected and by how much.

When Capital Suddenly Stops Flowing

As I remember from the dot-com bubble bursting, the market’s decision to stop funding money-losing companies can happen quickly and ruthlessly. When companies have nowhere to go to pay their bills, bankruptcy court is often their next stop.

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Since chipmakers and investors fund the AI labs that pay the AI data center builders that borrow to buy the chips, one lab’s funding gap could cascade through the supply chain.

The warning lights are flickering. S&P cut Oracle to BBB-, one notch above junk, and CoreWeave had to raise its spread and yield to close a $2.6 billion loan. Still, deals are getting done: CoreWeave’s loan closed, and top labs continue to raise enormous rounds.

Polymarket put the chances of “AI bubble burst” at 10% by this year-end and 24% by mid-2027. If that happens, I estimate CoreWeave stock could fall 40% to 60%; Oracle could lose 25% to 35% of its value; and SoftBank could decline by 25% to 40%.