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Comment by fhd2 | Hacker News Reader

What about the rest of the economy? Deutsche Bank recently said that the AI hype is the only thing holding the US stock market together. And if that crashes, it tends to ripple world wide.

Scary stuff, at least to someone who doesn't know all that much about market resilience. With what little I know, I'm hoping for a soft pop with slow deflation. But big tech seems to just pump harder right now.

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Any big bust will have broader market implications, but I don’t think this has the broad systemic impact that the financial crisis did. It will likely be really ugly for those caught up in it, but a news story and minor blip to the 401k of everyone else. If you are well diversified keep your head down and keep going. If you’re a VC that heavily invested in AI, I suggest preparing for a Cat 5 hurricane now.

The biggest impact the average person will see is that the days of VC funded cheap AI will be over. If they want to use AI to cheat on their essay they’ll need to pay a lot more.

I would caution that people who think they've diversified are not. A huge portion of the S&P 500 is the top handful of companies, so an index fund may mostly end up heavily invested in those firms.

Some people have shifted investments around to fix that, but I'm sure many people will be quite surprised.

Agreed. If you look at what's in the S&P 500, 7.49% is nVidia, 6.33% is Microsoft, 4.88% is Google, 3.86% is Amazon, and 2.95% is Meta. That's over 25% of the S&P 500 in companies that will see their share prices fall heavily if there's yet another AI winter.

Right. And that without considering semiconductor manufacturing/design (AMD, TSMC, Broadcom, etc.) and other second order effects.

Under diversification, as you are describing, is the first ingredient…

I suspect the second ingredient is US boomers right on the edge of retirement or otherwise shifting to fixed income… And a normal correction causes all of them to divest simultaneously from equities.

There is a potential for a stampede out of US equities.

https://www.slickcharts.com/sp500

NVDIA makes up 7.5% of the S&P500. It will not be a minor blip to 401ks if it collapses.

NVDIA has plenty of other business and will not drop to 0. Even if they drop 75%, than is still only a 2-3% (the math on percentages is weird and I don't feel like doing it - and I shouldn't because a 75% drop is just a random number and so I have no significant figures to work with) drop in my 401k. Of course other companies will be hit as well, but still my 401k will not drop and more than any other stock market crash, and there is every reason to think it will recover. It might stop my plans to retire in the next 10 years (but they were of questionable realism anyway), but any longer than that and odds are it will recover.

That's literally one company being used to make a point. At least 25% of the S&P is composed of highly AI-leveraged companies.

And you're acting like massive market changes don't propagate and won't cause ripple affects across the economy that impact other markets and change the view of financial risk.

Most companies have non ai business. They will fall but it won't be to zero. Bubbles have poped before, and they have been leveraged too. There will be some bad years - but in 15 years things will have recovered and we will be on the next bubble

I'd say you are underestimating the industries being propped up by the AI Boom.

To name a few examples - Construction (the industry pivoted to DCs) [0], the entire hardware industry (from personal experience CHIPS act recipients pivoted to AI-hype because of slow reimbursement rates), whatever tech hiring that even exists in the US at this point is itself looped into and justified by the AI boom or capital that is 1-2 degrees removed from the AI boom, the entire energy industry is tied to the AI boom [1], and the renewables industry in the US is increasingly AI-washed now as well [2] because of the ending of IRA and IIJA disbursements under Trump.

This wouldn't be a 2008 sized event, but it would be a bloodbath comparable to the Telecom Bust (2001) and the Dot Com Bust (2001). I would trust that every HNer would be worried about such a situation because of how existential a risk it would be for the entire tech industry - which employs most people on this forum.

[0] - https://www.mckinsey.com/featured-insights/themes/whos-fundi...

[1] - https://www.politico.com/news/magazine/2025/08/05/energy-ind...

[2] - https://www.bloomberg.com/news/articles/2025-09-26/ai-boom-w...

Well, that sounds pretty good to me, hope you're right.

I hope it all burns. Zero sympathy whatsoever for AI-anything. It's all a heaping pile of trash.

You hope the garbage heap surrounding your house burns?

You're hoping for a full on market crash? I don't mind AI hype companies crashing, would probably low key enjoy it with popcorn. But from what I understand, it's not that localised.

Yeah it will be funny. I couldn't care less. My tea and tobacco will still be just as cheap as it ever was. I'll still be playing my lute on the porch, unaffected.

You realize the startup you are working on would directly be impacted by any sort kf "AI Winter" right?

My startup is already dead in the water because I built it in an ADHD-fritz and only did it to spite a YC company, and in that regard I succeeded wildly because they threatened to sue me. Haha! I'm working on much cooler shit right now. Sick own though, checking my profile and all that.

It's not supposed to be a burn. My point is being flippant about a potential market crash under the assumption that you can somehow weather it out is extremely unrealistic unless you are a HNWI.

I'd rather not care than care about some event that is entirely out of reach for me to affect. It just doesn't matter. My grandmother has no idea what a 'market' is. She's doing fine.

It doesn't have to be bad. Part of the weak jobs market is companies spending their money on GPUs rather than hiring humans. That could reverse.

> Deutsche Bank recently said that the AI hype is the only thing holding the US stock market together.

Doesn't sound right. Russel 2000 is up ~10% YTD.

This 10% is largely due to weaker dollar though.

Most of the world already seems drifting towards far-right authoritarianism based on "just" run-of-the-mill cost-of-living increases and resentment towards economic elites (and a lot of that is lingering, never-healed fallout from the 2008 crisis). I dread to see what the reaction will be to a genuine global crash right now.

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