WASHINGTON, July 6 — On the ground inside the U.S. Department of the Treasury, a quiet alarm has been sounding for months. An internal report from the department’s Office of Financial Research warns that the frenzy around artificial intelligence stocks has swollen into a speculative bubble that now poses a systemic risk to the entire U.S. financial system. The report, prepared in early 2025, draws a stark parallel to the dot-com bubble of the late 1990s.
It describes rapid capital inflows into AI companies, many of which have yet to generate significant revenue. The analysis, first reported by a major financial news outlet on March 15, 2025, notes that the S&P 500’s concentration in a handful of large AI-focused firms has reached levels not seen since the 1929 stock market crash.
That comparison is jarring. Residents of the financial world describe a market where valuations have detached from fundamentals, with investors piling into AI names based on promise rather than profit. The Treasury report recommends enhanced monitoring by the Financial Stability Oversight Council, the interagency body created after the 2008 financial crisis to spot emerging threats.
It also suggests potential margin requirements for AI-linked securities — a regulatory tool that would force investors to put up more cash when buying these stocks on credit. Treasury Secretary Janet Yellen has not publicly commented on the report.
That silence has done little to quiet the growing calls for congressional hearings. Lawmakers on both sides of the aisle are pressing for answers, demanding to know what the Treasury knew and when it plans to act. By nightfall, the scene in Washington remains one of watchful waiting.
The report sits on desks at the Treasury and on Capitol Hill, a document that warns of history repeating itself. The question now is whether the warning will be heeded before the bubble bursts.
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