For decades, game-changing technologies and innovations have played a big role in sending the benchmark S&P 500 (^GSPC +1.55%), growth-fueled Nasdaq Composite (^IXIC +2.69%), and mature stock-driven Dow Jones Industrial Average (^DJI +0.44%) to new heights.
The arrival and mainstream proliferation of the internet in the mid-1990s is a perfect example of an innovation that completely altered the growth trajectory for American businesses, as well as paved the way for the retail investor revolution. The internet tore down information barriers that had existed between Wall Street and Main Street for more than a century, and it opened up countless new channels for businesses to market their products and services.
Since the dot-com hype hit Wall Street, investors have witnessed several next-big-thing technologies and innovations come and go. Examples include genome decoding, nanotechnology, 3D printing, blockchain technology, and the metaverse, among others.
But rarely are investors graced with more than one game-changing trend or innovation at the same time. In 2025, there are three!
Image source: Getty Images.
The concern for Wall Street and investors is that all three of these hyped trends are showing signs of breaking down. We may witness stock market history in 2026, with the potential bursting of three bubbles simultaneously.
Stock market bubble No. 1: Artificial intelligence (AI)
Investors have been waiting 30 years for a technology that could rival the internet in its ability to help businesses make the next leap forward. Artificial intelligence, which empowers software and systems to make split-second decisions without the need for human oversight, can be that technology. But while the long-term future for AI appears bright, historical precedent suggests problems may arise in the not-too-distant future.
The one factor all next-big-thing trends have had in common over the last three decades is the need for time to mature. Although sales of AI infrastructure have been through the roof, this doesn't mean AI solutions are being optimized, or that businesses are generating a positive return on their AI investments.
Investors have consistently overestimated the time it takes for a new technology to gain widespread adoption and utility. Nothing, thus far, suggests that artificial intelligence will avoid this fate.
Additionally, AI stock valuations are difficult to justify.
NASDAQ: PLTR
Key Data Points
For instance, AI and machine learning are integral to the success of data-mining specialist Palantir Technologies (PLTR +4.78%). Its Gotham software-as-a-service platform has no one-for-one replacement, and is used by the U.S. government and its allies to plan and oversee military missions.
But even with a breakneck sales growth rate, Palantir stock is valued at a trailing-12-month (TTM) price-to-sales (P/S) ratio of 102, as of the closing bell on Nov. 21. No megacap company for the last three decades has been able to sustain a P/S ratio above 30 for any extended period, let alone a P/S ratio that's over 100!
Stock market bubble No. 2: Quantum computing
A second stock market bubble that could pop concurrently with AI in 2026 is quantum computing. This new-age tech involves using specialized computers and the theories of quantum mechanics to solve highly complex problems that classical computers can't tackle.
Quantum computing pure-play stocks have, arguably, been even hotter than AI stocks. Shares of IonQ (IONQ +12.11%), Rigetti Computing (RGTI +12.65%), and D-Wave Quantum (QBTS +12.79%) have respectively rallied by up to 1,490% over the trailing year (ended Nov. 20). However, this trio suffers from three potentially fatal flaws.
NYSE: IONQ
Key Data Points
To begin with, quantum computing is an even more untested technology than AI. Whereas AI has had years to develop, IonQ, Rigetti, and D-Wave are still in the very early stages of commercializing their quantum computers. It will be years before quantum computers become practical for businesses to utilize.
Not to sound like a broken record, but quantum computing stock valuations have launched into the stratosphere. With IonQ, Rigetti Computing, and D-Wave Quantum just getting off the ground, their respective TTM P/S ratios are 130, 906, and 246. Even if all three manage triple-digit annual sales growth in the years to come, they'd still be firmly in bubble territory.
The third potential flaw with quantum computing pure-play stocks is the relatively low barrier to entry. Some cash-rich members of the "Magnificent Seven" have already debuted quantum processing units. With quantum pure-play stocks losing money and burning cash, they'll likely be no match for Magnificent Seven companies that choose to invest aggressively in the eventual quantum computing revolution.
Image source: Getty Images.
Stock market bubble No. 3: Bitcoin treasury strategy
The third bubble that could burst along with AI and quantum computing in 2026 is the Bitcoin (BTC +1.87%) treasury strategy. Spurred by Michael Saylor's Strategy (MSTR +5.01%), the Bitcoin treasury strategy involves using cash on hand or issuing stock/convertible debt to purchase Bitcoin, which is then held on the balance sheet.
What's made Bitcoin attractive is its perceived scarcity. Only 21 million tokens will ever be mined of the world's most valuable cryptocurrency. With the U.S. money supply continuing to expand, Bitcoin becomes a desirable asset to counter the effects of inflation.
As of Nov. 17, Strategy held 649,870 Bitcoin at an average price of $74,433 per token. It's spent more than $48 billion to acquire approximately 3.1% of all Bitcoin that will ever exist. Dozens of publicly traded small- and micro-cap companies have since followed in Strategy's footsteps by selling stock or issuing debt to purchase Bitcoin for their balance sheet.
NASDAQ: MSTR
Key Data Points
But there are several glaring flaws with the Bitcoin treasury strategy that could soon come to a head. For example, almost every company that's adopted this strategy is losing money and burning cash. Strategy has been funding its purchases by issuing preferred stock and diluting its common stock shareholders to pay the interest. Strategy's only operating segment involves analytics software, which has been losing money amid a modest decline in sales over the last decade.
Furthermore, Bitcoin treasury companies have been valued at significant premiums to the net asset value (NAV) of the Bitcoin they hold. Although Strategy's multiple to NAV has collapsed in recent weeks, this unsustainable multiple still exists in other small- and micro-cap stocks.
The final nail in the coffin is that Bitcoin itself is exhibiting flaws. It's only scarce in the sense that lines of computer code make it scarce, and it arguably failed the real-world utility test in El Salvador. Although it was the first digital currency to become tradable, it's nowhere close to being the fastest or cheapest blockchain-based payment network. Bitcoin isn't a necessity -- and if investors wake up to that realization, the bottom can completely fall out of Bitcoin treasury stocks.
