What happens when the AI stock market bubble bursts?
The hottest stocks in the market – Apple, Nvidia, and Meta – reflect the hype from past crashes. Is AI optimism about to crumble?
The stock market is no longer just for the wealthy.
More than half of low- and moderate-income Americans currently invest in capital markets, according to a new study by the BlackRock Foundation and financial nonprofit Commonwealth.
And the majority of less affluent investors, with household incomes between $30,000 and $80,000, started investing within the past five years.
In previous generations, owning stocks often meant having a broker and a lot of money. Today, the top 1% of Americans still own half of all stocks, according to federal data.
However, technological leaps and industry changes have dramatically lowered the hurdles to market entry. Now anyone can buy it.
“The barriers to entry are low,” Commonwealth CEO Timothy Flack said. “You can start with $50, or in many cases $1 and a smartphone. That’s what matters.”
Got $5 and a smartphone? Let’s buy some stocks.
Stock information was distributed in high-end financial magazines, subscription newsletters, and even on country club golf courses.
Today, anyone with access to the Internet can summon up tons of investment advice with a simple Google search. YouTube and TikTok are full of investment influencers.
And buying stocks has never been easier. Online platforms allow consumers to purchase stocks without the help or commissions of a broker. For the price of a cup of coffee, you can own a piece of the market.
“No brokerage firms charge commissions these days, and many allow fractional share trading,” said Robert Brokamp, senior retirement advisor and financial planning expert at The Motley Fool. “In some cases, you can get a piece of Nvidia or Microsoft stock for just a $5 investment.”
The report, released Oct. 13 by the BlackRock Foundation and the Commonwealth, is based on a nationally representative survey of more than 2,750 Americans from low- or moderate-income households.
Investors opened 46 million accounts in 2020-21
The study is part of a larger effort to study the flow of new investors into the stock market during the COVID-19 pandemic. In 2020 and 2021 alone, retail investors opened 46 million new brokerage accounts.
The pandemic has inspired many Americans to try their hand at investing. Thanks in part to the federal government’s stimulus package, they’ve been stuck at home, cutting back on spending and building up savings.
“Some people realized they had more cash or they had more time,” Flack said.
For the American middle class, stocks and real estate served as a gateway to the American Dream, allowing a modest investment to earn a lifetime of capital gains.
But in recent years, soaring home prices and rising interest rates have put homeownership out of reach for many people. With no minimum investment, the stock market remains a viable option for building wealth.
“Many young people and low-income people are not able to enter the housing market,” said Caleb Silver, editor-in-chief of financial journalism site Investopedia. “But they were able to build their net worth by investing in the stock market and owning individual stocks.”
The stock market sells itself
As a wealth-building tool, the stock market has done a great job of promoting itself.
According to The Motley Fool, the S&P 500 index is up 261% over the past 10 years, an annualized increase of 13.6%.
“With a few exceptions, the market has been experiencing an extraordinary sell-off over the past 10 to 15 years,” Brokamp said. “It will get more attention and more people will invest.”
Over time, low-income Americans may be able to increase their stock ownership and gradually close historic wealth disparities.
According to a Motley Fool analysis, in the first quarter of 2025, the bottom 50% of Americans by net worth owned just 1% of all stocks.
As more low- and middle-income consumers own stocks, their portfolios will likely eventually grow.
“Americans are very good at being consumers,” Silver says. “But they are also becoming better owners of the companies in which they are spending money.”
According to a BlackRock report, low-income investors have roughly the same aspirations as higher-income Americans. Survey respondents cited the following as their top investment goals:
- Retirement allowance (37%)
- Money for the future (35%)
- Reduced financial stress (27%)
- Money for children and family (27%)
This study does not include 401(k) accounts, IRAs, or other tax-advantaged investments. It focuses on consumers investing through standard brokerage accounts.
New investors choose individual stocks over index funds
The study found that new investors are more likely to own individual stocks than mutual funds or ETFs.
That could be a problem. All stocks are volatile, and individual stocks are generally more volatile than mutual funds or ETFs, which often mirror the performance of stock or bond indexes.
“My personal preference is to start with index funds and then move to individual stocks,” Brokamp said. “But now the opposite seems to be happening.”
Claire Chamberlain, chair of the BlackRock Foundation, said the research suggests new investors are “really hungry for information on how to diversify” their investments. “One of the things the industry can do is meet people where they are.”
Chamberlain said the financial services industry could help new investors, for example by encouraging more households to open emergency savings accounts.
A recent analysis by Investopedia found that the average American household needs at least $35,000 in emergency savings to cover unexpected expenses.
Emergency savings provide financial security. Low-income households with no savings are more likely to liquidate their investment accounts if their car breaks down or their roof leaks.
“One of the highlights of this study is the importance of having emergency savings to support investors’ ability to continue with their plans,” Chamberlain said.
