The U.S. economy has shown impressive strength over the last year, with the S&P 500 rallying by 16% in 2025. However, beneath this veneer of economic prosperity lies a troubling trend: the highest number of large corporate bankruptcies in 15 years. In 2025 alone, 717 major American companies filed for bankruptcy, a 4.37% increase from 2024 and 12.21% greater than during the height of the COVID-19 pandemic in 2020.
Corporate Bankruptcies Reach Alarming Levels
This figure is the highest since 2010, which saw 828 corporate failures, underscoring deep-seated concerns among citizens, investors, and analysts about the overall health of the economy. Factors contributing to these anxieties include America’s surging public debt, stubbornly high inflation, and escalating costs of goods and services. Additionally, the concentrated growth of the economy’s value in a handful of tech giants—referred to as the ‘Magnificent 7’—has raised concerns about market imbalance and over-reliance.
The AI Boom and Its Fragile Foundations
Many have pointed out the perceived bubble surrounding artificial intelligence (AI) investments. Tech leaders like Nvidia and Microsoft are at the forefront, driving innovation in AI technologies while simultaneously funding smaller companies like OpenAI and Anthropic, which, in turn, rely on their services. This circular investment pattern has some analysts worried about the long-term sustainability of the so-called ‘AI boom.’
Despite these concerns, the fiscal strength of major market players—such as Nvidia, with a valuation contributing significantly to the S&P 500’s overall growth—has helped stabilize the market for now. Some analysts even argue that the robustness of these companies’ financial positions distinguishes this tech-fueled surge from the infamous Dot-com bubble of the 1990s.
What Are Experts Saying?
Prominent investors like Michael Burry, renowned for his predictions during the Great Recession, remain cautious. Burry has notably forecasted an impending economic crisis. Meanwhile, Warren Buffett, in his final year as CEO of Berkshire Hathaway, built up record cash reserves in 2025 rather than focusing on equity investments—signaling his own concerns about the market’s stability.
How Should Individuals Prepare?
For those worried about economic turbulence ahead, diversification remains key. Investing in sectors less impacted by potential market shocks, such as precious metals or low-volatility index funds, could provide stability. Additionally, for those navigating this uncertain landscape, financial tools are essential to manage your portfolio effectively. Platforms like eToro offer the ability to invest in stocks, cryptocurrencies, and other assets while also providing risk management features and educational resources for investors of all experience levels.
While the heightened number of bankruptcies and economic uncertainty are cause for concern, strategic planning and prudent investments can provide a measure of security in the face of potential market fluctuations.
