Raad Mahmoud Al-Tal

The global economy is going through a very sensitive period. Rapid technological progress is unfolding alongside deep financial imbalances. This combination is reviving fears of economic and financial crises similar to those seen in the past. The warning by the President of the World Economic Forum about three possible bubbles in financial markets is therefore not a casual comment. It reflects a situation in which risks are building up at the same time and on an unusual scale.

What makes the current situation different is that the three bubbles artificial intelligence, cryptocurrencies, and debt are not separate. They are closely connected. If one bubble bursts, it could quickly intensify pressure on the others, putting the global financial system under serious stress.

Financial markets, especially technology stocks, have shown strong optimism for months. Many investors believe artificial intelligence will fundamentally reshape the global economy and business models. This belief has pushed asset valuations to record highs, while important risks have been largely overlooked. These include persistent inflation, tighter monetary policies, and rising trade tensions. Recent declines in technology stocks suggest that markets may be starting to recognize how fragile these valuations are.

The artificial intelligence bubble is at the center of these concerns. There is no doubt that AI can raise productivity and improve efficiency. However, the way this expansion is being financed is worrying. Large technology companies have increasingly relied on borrowing rather than operating profits to fund new projects. Huge sums have been invested in data centers and energy-intensive infrastructure, even as interest rates remain high and credit conditions tight.

The fast growth in data centers, now numbering around 12,000 worldwide, raises an important question. What happens if returns from AI investments are slower or smaller than expected? In that case, companies could be left with expensive, underused assets funded by debt. This would resemble the dot-com bubble of the early 2000s, but on a larger scale and with stronger links to credit markets.

Concerns are growing as indicators of default risk move closer to levels seen during the 2008 financial crisis. Higher costs of insuring AI-related debt show that investors are becoming more aware of these risks. Warnings from senior technology executives that no company would be fully protected if the AI bubble bursts underline how widespread the exposure has become.

Cryptocurrencies form the second bubble. The recent sharp fall in Bitcoin prices has once again shown how sensitive digital assets are to changes in global risk sentiment. At the same time, cryptocurrencies have become more closely linked to stock markets. This weakens the idea that they can act as a safe alternative investment. As digital assets become part of institutional portfolios, any major decline could affect not only individual investors but also traditional financial institutions.

The link between artificial intelligence and cryptocurrencies is growing stronger. Some crypto-mining firms are now investing in data centers for AI use. This means that funding sources and risks are increasingly shared. When confidence in AI-related debt weakens, it quickly spreads to digital assets, making Bitcoin a useful indicator of broader market risk appetite.

The debt bubble is the most dangerous of all. Global public debt has surpassed 100 trillion dollars, and total public and private debt is now more than three times the size of the world economy. Governments have not carried such heavy debt burdens since the end of World War II. Higher interest rates have sharply increased debt-servicing costs, reducing governments’ ability to respond to future crises.

These risks are not limited to emerging economies. Advanced economies are also affected, as debt levels in major countries approach those once associated with fragile financial systems. Even more worrying is that a growing share of private debt is being used to finance AI infrastructure, directly linking the debt problem to the other two bubbles.

History shows that financial bubbles are not rare events, but recurring patterns that change shape over time. What is different today is that these bubbles are happening at the same time and are deeply connected. Past crises in 1929, 2000, and 2008 were severe, but they did not occur simultaneously. Today, the collapse of a single bubble could trigger a wider chain reaction.

The message is clear. Artificial intelligence is not a myth, cryptocurrencies are not simply a temporary trend, and debt is not always harmful. The real danger lies in excess, in relying too heavily on borrowing, and in ignoring long-term sustainability. What markets need now is not panic, but a more realistic assessment of risk and more cautious fiscal and monetary policies, before these three bubbles turn from warnings into a full global crisis.