Every year brings a new storyline, but 2025 has given us one theme that refuses to leave the spotlight: AI. It leads the headlines, dominates investor conversations, and keeps showing up as the solution to… practically everything.

Naturally, many clients are asking: are we in an AI bubble?

We’ll be upfront, as we always are—we don’t know the future. Nobody does. But we can look at what’s happening beneath the surface, and right now, two undercurrents stand out. Neither one has turned into a full-blown problem, but both deserve attention because of where they could lead if they continue to develop in the wrong direction.

Let’s break them down.

1. The AI surge: Incredible Momentum… with Some Cracks in the Story

AI carried markets this year. Every week seemed to bring a new partnership announcement: OpenAI teaming up with another member of the Magnificent 7, Anthropic cutting deals—it looks like progress, but it also reveals signs of circular financing.

After all, when NVIDIA has agreements with OpenAI, and OpenAI has an agreement with Microsoft, and Microsoft buys chips from NVIDIA, you have to ask yourself: is that as healthy as it looks on paper?

For a while, the counter argument centered on one idea: “This isn’t the dot-com bubble. We’re not loading up the system with debt. These companies are funding innovation with cash from their strong balance sheets.”

That’s partially true. But it’s not the whole picture anymore.

We’re now seeing signs of AI spending shift away from cash and into debt:

• Oracle started tapping into debt markets.
• Meta hinted at growing expenditures financed the same way.

Now, do these moves guarantee a problem? No. But they introduce a vulnerability that didn’t exist before—and they connect to a second trend that’s been flying under the radar.

2. The Rise of Retail Private Equity: A New Access Point… with Big Caveats

The other “AI” story has nothing to do with artificial intelligence. It’s the spread of Alternative Investments and Private Equity into the retail world.

Historically, only UHNW investors had access to private equity. You needed deep pockets, inside relationships, and a willingness to lock up capital for years. That exclusivity acted as its own safety mechanism.

Not anymore.

We’re now watching the rapid “democratization” of private and alternative investments. Suddenly, a fund that once required $250,000 now offers an entry point of $5,000. On paper, that sounds great. But in reality, this shift carries a lot of fine print.

Here’s why:

Illiquidity hides beneath the surface.

If a private company claims it’s worth $X but you can’t find anyone to buy it, what is it actually worth? Without a marketplace, the number becomes arbitrary.

Institutional investors are offloading illiquid positions.

Let’s use SpaceX as an example. Suppose I hold SpaceX shares privately and can’t find a buyer because the company isn’t public. Suddenly, a retail-facing private equity vehicle appears that gives everyday investors access to SpaceX. Perfect—now I can dump my illiquid position into that fund.

Retail investors feel excited: “I own SpaceX!”
Meanwhile, institutional investors feel relieved: “I no longer do.”

If those retail investors ever want to sell… where will they go? That’s the problem.

Where These Two Undercurrents Intersect

So, how do these two issues tie together? Here’s the concern:

If AI companies begin issuing more debt to sustain their enormous infrastructure costs, and retail private equity vehicles need sources of capital, what could happen next?

Those vehicles may start buying that AI debt.

That’s when an isolated issue becomes systemic.

Again, this hasn’t happened yet. But the framework is there, and it’s something worth watching.

Why This Matters with Markets Near All-Time Highs

Even after the recent correction, markets are close to record levels. Add in FOMO, AI hype, and a surge in “you need private equity” messaging, and you have a recipe for potential pitfalls.

When returns feel strong, people often start looking for ways to “juice” their portfolio:

• “Maybe I should jump into AI stocks.”
• “Maybe I should add private equity for higher returns.”

That mindset turns dangerous fast.

Behavioral economics calls it the Greater Fool Theory—the belief that it’s okay to buy something simply because it keeps going up, assuming someone else will buy it for more later. That works… until you become the final buyer in the chain.

You don’t want to be the greater fool holding:

• AI stocks after a massive run,
• private equity shares with no liquidity,
• or both, if these trends eventually merge.

So What Should You Do?

Stay grounded. Stick with the plan we’ve built together.

Markets never move in a straight line, and chasing hot trends rarely ends well. That’s why we focus on discipline, diversification, and long-term strategies that support your goals—not short-term tactics that feed the newest market narrative.

Have questions? Want to discuss your plan for 2026? We’d be happy to meet with you.