US stock market crash 2025 prediction: As the US stock market is showing early signs of strain because investors grow wary of an AI-fueled bubble, journalist Farid Zakaria spoke to Ruchir Sharma, chairman of Rockefeller International, who outlined what he calls the “4 Os” of a bubble, highlighting overvaluation, overinvestment, overleverage, and over-ownership as key warning signs, as per a video shared on social media X.
Most bubbles eventually burst, and American tech companies’ gold rush to A.I. is likely no exception. What happens to the economy when America’s A.I. bubble bursts? I asked the chairman of Rockefeller International, Ruchir Sharma: pic.twitter.com/cURZssJyxI
— Fareed Zakaria (@FareedZakaria) November 23, 2025
Overvaluation: Stocks Expensive Like 1929 and 2000
Sharma pointed to historical stock market valuations, showing that today’s market is as expensive as it was just before the 1929 crash and the dot-com bust of 1999-2000. When Zakaria pointed at the gold standard of stock valuation produced by the Nobel Prize winning economist Robert Schiller, Sharma said, “like in a bubble, you end up getting overvaluation. So this is what this graph shows, that if you look at historically, the stock market valuation today is very expensive.”
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Overinvestment: AI Driving an Accelerated Spending Frenzy
The second “O” is overinvestment, reflects the surge in AI-related spending. Sharma explained that tech investment as a share of the economy has soared, reaching nearly 40% this year, up from under 5% just a year prior. He pointed out that, “This time, there’s such an arms race on to be the leading player in AI that the acceleration that you have seen in investment in AI has been huge.”ALSO READ: What triggered Bitcoin’s $800 billion crash? Experts reveal the major reasons behind the BTC USD meltdown
Overleverage: Rising Debt Signals Risk
Sharma warned that overleverage is increasingly visible in the market. As companies borrow to fund ambitious AI initiatives, the risk of financial strain grows. He said, “This is starting to show up in the marketplace.”
Sharma highlighted that, “Even some of the big companies that at one point in time used to be flush with cash, like Meta or Amazon. These companies now are issuing debt for the first time in a long while,” adding, “So Meta has gone from having a net cash position to now being one of the big issuers of debt just to finance the AI boom.”
Over-ownership: Americans’ High Exposure to Stocks
Finally, Sharma highlighted over-ownership, noting that the average American household now holds more than half of their financial wealth in stocks, a level higher than in 2000. He said that because of the “Amount of exposure that the American economy has and the average household has to the equity market, that’s going to be painful.”
Catalyst for a Market Wobble
Sharma explained that recent market jitters were triggered by the Federal Reserve signaling it might not cut interest rates in December. He pointed out that, “All it has taken is for the U.S. Federal Reserve to say they may not cut interest rates in December. That’s been the catalyst for why we are seeing this wobble take place in the equity market.” If inflation rises and the Fed is forced to raise rates, Sharma warned that the US could face a significant market downturn.
A Bubble With a Difference: Fear, Not Euphoria
The chairman of Rockefeller International noted that this AI bubble is “the most hated bubble in history.” Unlike previous bubbles marked by exuberance, today’s optimism is tempered by fear. Only 31% of people feel comfortable with AI technology, in contrast to the widespread excitement during the dot-com boom. Sharma explained that concerns about job displacement and economic uncertainty are driving caution, even among techno-optimists.
FAQs
What are the “4 Os” of a stock market bubble?
They’re four warning signs of a bubble: overvaluation, overinvestment, overleverage, and over-ownership.
How is this AI bubble different from past ones?
Unlike past bubbles fueled by excitement, today’s AI hype is driven more by fear than euphoria.