Despite the face-value strength of the U.S. economy, exemplified by the S&P 500’s 16% rally in 2025, the previous year has seen a string of warning signs. One of the most pointed metrics of brewing trouble has been the number of large corporate bankruptcies, which has reached its highest level since 2010.
Specifically, 717 major American companies have filed for bankruptcy in 2025 – a 4.37% increase from 687 in 2024. Furthermore, the number is 12.21% greater than during the COVID-19 pandemic of 2020 and is the highest figure recorded since the 828 corporate failures recorded in 2010.
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Such an increase gives a quantifiable anchor for the anxieties felt by many citizens, investors, and analysts who have, for years, been fearful due to factors like America’s massive public debt, high inflation and price increases, and an apparent overconcentration of value in a small number of companies huddled around Nvidia (NASDAQ: NVDA).
Furthermore, the number is consistent with the phenomenon of the bulk of the S&P 500’s growth arising from the ‘Magnificent 7’ – a set of mostly technology companies whose collective $21 trillion value rivals the Chinese annual GDP.
The trend also triggered an online panic once the apparent circular nature of artificial intelligence (AI) investments became widely-known.
Indeed, the current pattern of corporate investments appears like companies such as Nvidia and Microsoft (NASDAQ: MSFT) are subsidizing smaller companies like OpenAI and Anthropic to purchase their products and services.
Bankruptcies remain below crisis levels despite yearly increase
Still, despite a major crash being anticipated for years and a chorus of voices alerting that the ‘AI bubble’ is about to burst throughout 2025, the American stock market continues advancing, and even the heightened number of bankruptcies is dwarfed by 5,336 and 5,026 such filings during the crisis years of 2008 and 2009.
Similarly, while many have drawn parallels between the current state of the economy and the Dot-com bubble, some analysts have noted that the fiscal strength of the drivers of the AI boom is unparalleled by anything seen during the 90s, meaning it is likely they’ll be able to absorb any shocks that might arise.
Still, the actions of multiple historically-succesful investors do give cause for concern. Notably, Michael Burry, the most famous winner of the Great Recession, is forecasting a crisis and is investing accordingly.
Warren Buffett, for his part, spent his final year as CEO of Berkshire Hathaway (NYSE: BRK.A, BRK.B) increasing the company’s cash reserves to a record high at the expense of equity investments.
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