For decades, game-changing technologies and innovations have played a major role in setting the benchmark. S&P 500(SNPINDEX: ^GSPC)growth oriented Nasdaq Composite(NASDAQINDEX: ^IXIC)and mature stock focused Dow Jones Industrial Average(INDIKS: ^DJI) to new heights.
The advent and proliferation of the Internet in the mid-1990s is a perfect example of an innovation that completely changed the growth trajectory of American businesses and also paved the way for new technologies. retail investor revolution. The Internet has broken down information barriers that existed between Wall Street and Main Street for over a century and opened countless new channels for businesses to market their products and services.
Since the dot-com hype hit Wall Street, investors have seen many new big technologies and innovations come and go. Examples include genome decoding, nanotechnology, 3D printing, blockchain technology, and metadata.
But it’s rare for investors to be rewarded with more than one game-changing trend or innovation at the same time. There are three in 2025!
Image source: Getty Images.
The concern for Wall Street and investors is that all three of these exaggerated trends are showing signs of collapsing. We can witness stock market history in 2026. Potential for three balloons to burst simultaneously.
Investors have been waiting 30 years for a technology that could rival the internet in helping businesses take the next step. Artificial intelligence, which enables software and systems to make instant decisions without the need for human supervision. to be Let this be technology. But while the long-term future of artificial intelligence looks bright, historical precedents show that problems may arise in the not-too-distant future.
What all major new trends over the last three decades have in common is the need for time to mature. Although sales of AI infrastructure have skyrocketed, this does not mean that AI solutions are optimized or that businesses are seeing a positive return on their AI investments.
Investors consistently overestimate the time it will take for a new technology to become widely adopted and available. There is nothing so far to suggest that AI will avoid this fate.
Additionally, AI stock valuations are difficult to justify.
For example, artificial intelligence and machine learning are integral to the success of a data mining professional Palantir Technologies(NASDAQ:PLTR). The Gotham software-as-a-service platform has no exact replacement and is used by the U.S. government and its allies to plan and control military missions.
But despite having a very high sales growth rate, Palantir shares are valued at a trailing 12-month (TTM) price-to-sales (P/S) ratio of 102 as of the closing bell on November 21. No large-cap company in the last three decades has been able to sustain a P/S ratio above 30 for an extended period of time, let alone a P/E ratio above 100!
The second stock market bubble that may burst simultaneously with artificial intelligence in 2026 is quantum computing. This new-age technology involves using special computers and the theories of quantum mechanics to solve extremely complex problems that classical computers cannot solve.
Quantum computing pure-play stocks were arguably even hotter than AI stocks. shares ionQ(NYSE:IONQ), Rigetti Computer(NASDAQ:RGTI)And D-Wave Quantum(NYSE: QBTS) In the following year (ended November 20) they increased sequentially by up to 1,490%. But this trio has three potentially fatal flaws.
First of all, quantum computing is a much more untested technology than artificial intelligence. Although artificial intelligence has years to develop, IonQ, Rigetti and D-Wave are still in development. A lot The first stages of commercialization of quantum computers. It will take years for quantum computers to become available for business use.
Not to sound like a broken record, but quantum computing stock valuations have skyrocketed into the stratosphere. While IonQ, Rigetti Computing and D-Wave Quantum are just getting started, their respective TTM P/S ratios are 130, 906 and 246. Even if all three manage triple-digit annual sales growth in the coming years, they’ll still be in bubble territory.
The third potential flaw in quantum computing pure-play stocks is that the barrier to entry is relatively low. Some cash-rich members of the “Magnificent Seven” have already introduced quantum computing units. Because quantum pure-play stocks are losing money and burning cash, they won’t be able to rival the Magnificent Seven companies that have chosen to invest aggressively in the eventual quantum computing revolution.
Image source: Getty Images.
The third bubble that may burst in 2026 with artificial intelligence and quantum computing Bitcoin(CRYPTO: BTC) treasury strategy. With encouragement from Michael Saylor Strategy(NASDAQ:MSTR)Bitcoin treasury strategy involves using cash on hand or issuing equity/convertible debt to purchase Bitcoin which is then held on the balance sheet.
What makes Bitcoin attractive is its perceived scarcity. Only 21 million tokens of the world’s most valuable cryptocurrency will be issued. As the US money supply continues to expand, Bitcoin is becoming a desirable asset to counter the effects of inflation.
As of November 17, the Strategy held 649,870 Bitcoins at an average price of $74,433 per token. More than $48 billion was spent to acquire approximately 3.1% of all Bitcoin that will ever exist. Dozens of publicly traded small and micro-cap companies have since followed the Strategy by buying Bitcoin for their balance sheets by selling stock or issuing loans.
But there is A lot There are glaring flaws in the Bitcoin treasury strategy that may soon come to a head. For example, almost every company that adopts this strategy loses money and burns cash. The strategy finances acquisitions by issuing preferred stock and forcing common stock shareholders to pay interest. The strategy’s only operating segment includes analytics software, which has lost money due to a modest decline in sales over the past decade.
Moreover, Bitcoin treasury companies are valued at significant premiums relative to the net asset value (NAV) of the Bitcoin they hold. Although Strategy’s NAV multiples have collapsed in recent weeks, this unsustainable multiple still persists in other small and micro-cap stocks.
The final nail in the coffin is that Bitcoin itself exhibits flaws. It is scarce only in the sense that lines of computer code make it scarce, and it probably failed real-world utility testing in El Salvador. Although it is the first tradable digital currency, it is not even close to being the fastest or cheapest blockchain-based payment network. Bitcoin is not a necessity, and if investors realize this fact, the bottom of Bitcoin treasury stocks could fall completely.
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Sean Williams It has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, IonQ, and Palantir Technologies. The Motley Fool has a feature disclosure policy.
