Wall Street hit a new peak at the start of June. The S&P 500 and Nasdaq closed at record highs on June 2, after all three major indexes set records together the day before. Wall Street called it good news. For workers, it is a warning.
One warning sign shows how far stock prices have run ahead of profits. In early June, stocks were selling for about 40 times average corporate earnings over the previous decade. In 155 years, that measure has been clearly higher only at the peak of the dot-com bubble in 1999, just before the crash erased trillions in paper wealth.
Who owns the boom?
The richest 10% own about 87% of corporate stocks and mutual fund shares. The top 1% alone owns about half. That is who they are for. Most workers own none.
A stock price is a claim on profits a company has not yet made. Marx called this fictitious capital — paper claims on future surplus value, bought and sold as if they were wealth.
Real wealth is produced elsewhere, by labor using machinery, materials and land. Without workers, the machines create no value; they only sit there.
Stock prices have climbed much faster than the profits workers are producing. Wages have crawled. The market measures the fortunes of the owning class, not the people who do the work.
Today, Wall Street’s biggest bet is artificial intelligence.
Nvidia, the chipmaker at the center of the AI boom, is worth around $5 trillion. Microsoft, Amazon, Alphabet, Meta and the rest are pouring hundreds of billions into chips, data centers and power. Goldman Sachs estimates AI capital spending will reach $765 billion in 2026.
The boom rests on a narrow base. Almost all recent U.S. GDP growth has come from tech investment, while investment in the rest of the economy has fallen. A handful of AI-linked companies now carry a huge share of corporate profits and stock-market value.
The data centers, chips and electricity systems are real construction on an enormous scale. But Wall Street has already priced in profits that may never be made.
This is the contradiction Marx pointed to. Capital keeps replacing workers with machinery, but labor is the source of new value. The more capital is tied up in machines, buildings, chips and electricity supply, the harder it becomes to maintain the same rate of profit. That is the tendency of the rate of profit to fall.
The bosses answer this in familiar ways. They cut jobs, speed up work, attack unions and push down wages. They demand subsidies, borrow, gamble and chase war contracts. They turn future profits into paper wealth.
That is what the AI boom is: a real buildout wrapped inside a speculative mania. The technology may survive the bubble. These stock prices will not.
The permanent war economy sits under the boom.
The Pentagon’s 2026 budget topline reached $1 trillion for the first time. The 2027 request runs to $1.5 trillion — the largest in U.S. history and a jump of about 44%. The cost of the war on Iran, opened Feb. 28 as Operation Epic Fury, is not counted in that request. Stephen Semler of the Security Policy Reform Institute put the war’s cost at nearly $72 billion in its first 60 days — about $1.2 billion a day — counting weapons, lost equipment and subsidies to Israel. The Pentagon told Congress the figure was $25 billion. Semler called that a lie.
Wall Street treats this as growth. But war production drains workers and weakens the productive base capitalism depends on.
Military production consumes labor, steel, microchips and fuel but makes no goods workers can use and no goods that expand useful production. It turns the means of production into means of destruction. A missile or an AI targeting system is bought, used and destroyed. Capitalism grows by turning profit back into production; war spending breaks that cycle, consuming wealth that is not returned to useful production and wearing down the productive base U.S. power rests on.
That is imperialist decay. While U.S. capital is burned up in weapons, China — a developing socialist country, not an imperialist rival — directs investment into production, infrastructure, transport, industry and technology. One path expands the productive base. The other burns it up.
This does not make war spending unprofitable for the arms monopolies. It makes it very profitable for them. Missile orders, warships, drones and battlefield software feed Lockheed Martin, RTX, Northrop Grumman, General Dynamics, Palantir and Anduril, along with the investment funds whose shares lift the indexes. But those profits rest on a loss for society. The same labor and materials could have produced homes, hospitals, trains, schools, power systems and useful machinery. Instead they are consumed by war.
No measure can name the day of a crash. But when stock prices climb this far ahead of profits, history gives a warning. Every previous time the gap reached this level, the market eventually fell hard.
The losses will come as layoffs, frozen hiring and closed factories, warehouses and offices — and through the 401(k)s and pension funds workers were pushed into after defined-benefit pensions were destroyed, a forced ticket to a casino they neither own nor control.
The workers who never shared in the boom will be told to sacrifice when the bubble breaks. Workers have no reason to cheer Wall Street’s record highs.
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