As AI bubble fears circulate, remember the railroad bust of 1873

AI stock bubble talk is percolating again as Nvidia ( NVDA ), AMD ( AMD ), and Micron ( MU ) push to record highs .

While the pundits love comparing what we are witnessing with Big Tech stocks to the lead-up to the dot-com crash in the early 2000s, don't overlook how this moment is also creeping up on the railroad bust in the late 1800s.

As the chart below from Bank of America strategist Michael Hartnett shows, peak concentration for most asset bubbles in history has been capped around the 40% level, except for during the railroad boom.

The railroad bust of 1873 was a massive financial collapse driven by speculation in railroad construction. This ultimately led to the Panic of 1873.

PBS noted that 89 of the country's 364 railroads went bankrupt during the bust. A total of 18,000 businesses failed in only two years. By 1876, unemployment had risen to 14%.

No one is saying this moment with AI forward stocks is similar, but it warrants watching as valuations continue to climb on leading names — and their influence over the broader market increases.

Indeed, the stock market is pretty much being kept afloat by three tech stocks .

The S&P 500 ( ^GSPC ) has never been more concentrated in just three stocks than it is today, with Nvidia, Apple ( AAPL ), and Microsoft ( MSFT ) representing over 21% of the index, per data from Creative Planning.

The importance of these three stocks to the S&P 500 has never been greater. Only IBM ( IBM ), AT&T ( T ), and ExxonMobil ( XOM ) could hold a candle to the three tech stalwarts of today: In the mid-1980s, those three industrial giants at their peak made up 13.4% of the S&P 500.

Brian Sozzi is Yahoo Finance's Executive Editor, host of the Sozzi Unleashed morning show and the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi , Instagram , and LinkedIn . Tips on stories? Email brian.sozzi@yahoofinance.com.