Sen. Elizabeth Warren, D-Mass., warned Thursday that the debt fueling the artificial intelligence boom is building toward a 2008-style financial crash and urged Congress to enact structural reforms before the bubble bursts.
In prepared remarks at a Vanderbilt Policy Accelerator event in Washington, the ranking member of the Senate Banking, Housing, and Urban Affairs Committee said the industry's borrowing, its opaque deal structures and its push for federal backstops echo the run-up to the subprime mortgage crisis.
Warren said AI firms have turned to private credit funds and "convoluted debt structures" to finance data centers, chips and other infrastructure, while large banks extend credit both directly to the companies and indirectly through the shadow lenders that back them.
That web, she argued, hides where the risk sits and who absorbs losses if revenues fail to keep pace with spending.
"The complexity itself could trigger that crash," she said.
Warren grounded the warning in a widening gap between AI investment and revenue, saying the industry will need roughly $2 trillion in annual revenue by 2030 to justify current spending, but generated about $20 billion in 2025.
Bain & Company's September 2025 Global Technology Report reached the same $2 trillion projection and estimated an $800 billion shortfall.
Warren also cited analyst estimates that the AI bubble is 17 times the size of the dot-com frenzy and four times the size of the housing bubble, figures from a note by Julien Garran of MacroStrategy Partnership, a former UBS commodities strategist.
Her speech drew on "After the AI Crash," a March paper by Asad Ramzanali, director of AI and Technology Policy at the Vanderbilt Policy Accelerator.
Ramzanali, a former White House science policy official under President Joe Biden, argued that a correction could spread beyond tech because of the scale of investment and the "distortive features" of the financing, estimating that a bust on the scale of the dot-com crash could wipe out more than $20 trillion in household wealth, given current stock concentration.
Warren tied the financial risk to two Trump administration moves: loosening oversight of large banks and steering private-market assets into retirement accounts. She said both would amplify losses if AI-linked debt sours.
Retirement savers could see wealth "evaporate in a flash," she said, and credit could tighten for workers and small businesses far from the sector.
She accused major AI firms of pressing the administration for taxpayer funding and loan guarantees.
Her January letter to Treasury Secretary Scott Bessent as chair of the Financial Stability Oversight Council urged a formal probe into more than $1 trillion in projected AI-related debt. It also cited OpenAI's calls for federal support to reduce the risks of AI expansion.
Her reform agenda would restore structural limits on bank risk-taking; create a new digital regulator to enforce antitrust, consumer protection and data privacy rules; raise taxes on Big Tech; bring chip manufacturing back to the United States; and bar new executive bailouts.
The speech carries no legislative force, and Republican majorities have shown no appetite for new financial regulation.
Jim Thomas ✉
Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.
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