“Our country continues to face all sorts of disturbances, including the MSCI. They are trying to intimidate us,” Prabowo said during an address to his cabinet. “I simply want to tell MSCI: the Indonesian nation fears no one and will never back down.”

“We have the strength, the courage and we are willing to make sacrifices, and we refuse to surrender,” he added.

On Oct. 15, MSCI said it was considering downgrading Indonesia to “standalone” status, which would exclude the Southeast Asian country from its major global and regional indexes. The index provider cited “continued suspected coordinated trading behavior and lack of evidence of meaningful enforcement.”

As many investors use MSCI’s indexes as the basis for their funds, a downgrade could lead to billions of dollars of investment fleeing the country. A final decision on Indonesia’s status will come by the end of June 2027.

Indonesia has labored under the threat of a downgrade for most of 2026. In January, the index provider said it was considering lowering the country to “frontier” status, one rung below the country’s current “emerging” status. That downgrade threatened to pull as much as $13 billion in passive investment flows from the country. The current MSCI proposal—which would downgrade the country below “frontier”—would likely lead to even greater outflows.

The Jakarta Composite Index is down by more than 10% since MSCI announced its proposal. The benchmark index is down nearly 40% for the year so far.

Mounting pressure

The MSCI reclassification is only the latest challenge to Prabowo, now entering his third year in office. His approval rating has dropped to just 44.5%, according to a poll from Saiful Mujani Research and ​Consulting cited by Reuters, primarily due to public dissatisfaction over the state of the economy. The same pollster put Prabowo’s approval at 81% in November. 

More than six in 10 Indonesians say they are unhappy with Indonesia’s free meal program, one of the president’s flagship social policies. Seventy-one percent also doubt that his village cooperatives policy—which plans to establish hubs in roughly 80,000 communities to handle basic-goods distribution, savings, and other rural services—would succeed. 

Wildfires in Indonesia are also the source of widespread haze that’s blanketing much of the region and making Southeast Asian cities such as Singapore and Kuala Lumpur among the world’s most polluted. Singapore is now threatening to prosecute companies responsible for the wildfires.

Prabowo recently admitted that he’s open to foreign help to control the fires. But he’s also bristled at criticism. “Indonesia is a polite and patient nation. Our country is often insulted, but believe me, our nation does not want to be insulted all the time,” Prabowo said at Wednesday’s cabinet meeting.

Indonesians are increasingly protesting Prabowo’s administration. Reuters reports that more than 9,000 police officers were deployed across Jakarta this week, ahead of events marking Prabowo’s second year in office. 

Diplomatic flashpoint

The market turmoil is now becoming a diplomatic  issue. Former trade minister Muhammad Lutfi—who served under presidents Susilo Bambang Yudhoyono and Joko Widodo—accused Singapore state investors Temasek and GIC of pressuring MSCI to trigger a sell-off, so that foreign investors could “scoop up our strategic assets at discounted prices.” 

Both entities denied the allegations, with a Temasek executive calling them “patently untrue.”

The spat is forcing Indonesian market officials to play damage control. Jeffrey Hendrik, president director of the Indonesia Stock Exchange (IDX), pushed back against the conspiracy claims on Oct. 20.

“We have always believed, and continue to believe, that global index providers are independent,” Hendrik said.

“We seriously looked at the Atlantic Ocean, and I called Google Maps, who were really great with the lake,” Trump said at a rally in Pendleton, S.C., on Wednesday.

“No, no, no. This time, I’m not doing it,” Trump recalled Pichai saying. According to Trump, Pichai explained that oceans span multiple countries and urged him, “Please don’t ask us to do that.”

“Should I pass on… I think let’s keep it the Atlantic Ocean, right?” Trump asked the crowd.

But Trump wasn’t finished with the oceans. He then floated renaming the Pacific the “American Ocean” and asked how Europe would feel about it, though no part of Europe borders the Pacific.

It wasn’t the first time Trump had raised the idea. At a rally in Dalton, Ga., last Friday, Trump said he had asked Google about renaming either the Atlantic or the Pacific the “Trump Ocean.”

“You know what they said? ‘We’ve had it. That’s enough. We’re not doing it anymore,’” Trump told the crowd.

He said he was only kidding. He then added that he had sent Google “a little picture” labeled “The Trump Ocean,” and that the company called back to say oceans were different. “I said I was only kidding. That time I was,” Trump said.

Trump first teased an ocean rename in August, when he signed the order renaming Lake Ontario in the Oval Office.

Fortune asked Google to confirm Trump’s account of the conversation and whether it had received a formal request to rename the Atlantic Ocean. Fortune also asked how Google would handle a proposed name change for an ocean shared by multiple countries. Google did not respond to Fortune’s request for comment.

Trump’s push to rename geographic landmarks began on his first day back in office. On Jan. 20, 2025, he signed an executive order directing the federal government to call the Gulf of Mexico the Gulf of America.

On Aug. 27, 2026, he signed Executive Order 14422, renaming Lake Ontario as Lake America, even though the lake is shared with Canada.

Can Trump rename an entire ocean?

For federal use, names of oceans and seas fall under the Foreign Names Committee, part of the U.S. Board on Geographic Names. That’s according to a September report by the Congressional Research Service, Congress’s nonpartisan research arm.

Trump could direct federal agencies to adopt a different name for the Atlantic or Pacific. That would not make the change binding anywhere else.

Lake Ontario shows the limits. Trump’s order renamed it for U.S. federal use, but Canadian Prime Minister Mark Carney rejected the change, saying Canadians would keep calling it Lake Ontario “then, now and always.”

Internationally, a United Nations resolution on geographical names says that when countries sharing a feature can’t agree on a common name, each country’s name is accepted. One country’s choice doesn’t override the others’. An ocean bordered by dozens of countries would be far harder to rename than a gulf or a lake.

Google didn’t have to follow Trump’s lead. But it did.

Google was not legally required to adopt either name change. The CRS report notes that federal naming decisions don’t bind private companies such as Google Maps and Apple Maps.

Still, Google Maps adopted the Gulf of America and Lake America for U.S. users after the federal Geographic Names Information System was updated. Google said the changes followed its long-standing policy of reflecting official government sources and showing different names for bodies of water by country.

For the Gulf, users in Mexico still see Gulf of Mexico, while users outside the U.S. and Mexico see both names. The Gulf decision carried a cost: Mexico sued Google over the label.

For Lake Ontario, Canadian users continue to see the original name, and users outside the U.S. and Canada see both. Apple Maps made the same switch for U.S. users days later.

Business Insider reported that Google was “getting flak” over the lake rename, facing backlash from users and Canadian officials.

Meanwhile, rival MapQuest refused to adopt the new name, as it had with the Gulf. Its app climbed from No. 128 on Apple’s U.S. App Store on Aug. 28 to No. 1 overall by Sept. 1. The app recorded an estimated 632,000 U.S. downloads after Trump’s Aug. 27 order, according to Sensor Tower data reported by TechCrunch.

From floating “Trump Strait” for the Strait of Hormuz to proposing “American Ocean” for the Pacific, Trump has no shortage of new names. But if his account of Pichai’s reluctance is accurate, an entire ocean may be one step too far for Google.

The investor first met Michael Truell while conducting case study interviews for her student VC firm, Dorm Room Fund. At the time, Truell hadn’t founded a company; but three years later, the venture capitalist persuaded her firm, BoxGroup, to invest in the Gen Z engineering savant’s adolescent business. The firm poured $750,000 into the recent graduate’s little-known start-up: an AI coding company called Cursor. And a couple follow-on checks and a few years later, Cursor swelled into an industry sensation, with SpaceX eventually acquiring the business for $60 billion in 2026—a deal estimated to drive $1 billion in returns to BoxGroup.

That bet cemented Smilow as the student-founder whisperer—a VC whose early conviction in Truell helped deliver a roughly 650-fold return on the firm’s original investment, alongside high gains from subsequent financing. As a partner at BoxGroup and the Dorm Room Fund, the 36-year-old is continuing to chase that success at America’s elite schools. Smilow says she sets aside a “huge” amount of time mingling with the young AI natives, with an upcoming trip to Harvard University and MIT on the books—the second time she’s visited this year. After all, 588 U.S. alumni from the two colleges have built billion-dollar companies., representing roughly 13.1% of all of America’s unicorn founders, according to a July analysis from Stanford professor Ilya Strebulaev.

“[College] is a fantastic place to recruit for the portfolio, and I often bring portfolio founders with me to campus,” Smilow tells Fortune. “On campus you get a real sense of forward-looking technological market trends. You get to hear what students at a lot of these cutting-edge research institutions are interested in, what they’re studying, what companies they want to work at…It’s a fantastic pulse on the market and our technological shifts.”

Smilow says a few entrepreneurial trends are taking over college campuses. She’s been spending a lot of time looking into frontier tech, like robotics and quantum computing; and when roughly four out of 20 to 25 students brought up brain-computer interfaces (BCI) during a fall 2024 campus conversation, she took it as a signal to pay closer attention. Two years later, she says, early-stage BCI companies are already proliferating. For Smilow, the lesson is that listening to talented people can help investors spot promising markets before they become obvious.

The VC explains that her strategy is less about a founder’s age, and more about connecting with talent before they come into their own. Some may become founders later in life, while others may never venture into the entrepreneurial life—but she says that learning about the ambitious spaces talented people are exploring is “the most authentic way” to do her job.

Over her six-and-a-half years at the firm, BoxGroup has backed the likes of Ramp and Clay in their early stages—and now, both have reached multibillion-dollar valuations. Smilow says that the firm is founder-led, working with businesses that are almost “never proven.” She’s on the lookout for promising talent whose names repeatedly come up in conversations with their peers.

“I tend to think often the best founders don’t make the best interns,” Smilow said, adding that the part-time gigs are often “boring” for young entrepreneurs. “They’re not always the most empowered positions, so I spend less time—especially for early-in-their-career founders—talking to prior bosses. There’s value in that, but I actually spend more time talking to their peers and understanding how their peers perceive them.”

Caffeine pouches, small packets placed in the mouth between the lip and gum, are marketed as a portable and discreet way to boost energy and focus. Some contain as much as 200 milligrams of caffeine or about the amount in two cups of coffee, according to the American Academy of Pediatrics. Health experts warn that consuming too much caffeine can cause serious side effects, including increased heart rate, especially in children and teens.

The pouches also closely resemble nicotine products, raising concerns among school officials about student health and the difficulty of distinguishing between the products. Some K-12 school districts across the U.S. have responded by banning them, even though there is no federal minimum purchase age for caffeine pouches.

Here’s what to know about the pouches, their potential risks and how schools are responding.

Caffeine pouches have a variety of nicknames

Caffeine is a stimulant that increases alertness, energy and brain activity. It can be safe for most healthy people in moderate amounts. The U.S. Food and Drug Administration said amounts up to about 400 milligrams per day, roughly two to three 12-ounce (about 354.8 milliliters) cups of coffee, are not generally associated with health problems.

Caffeine pouches are small packets designed to release caffeine through the tissues in the mouth. The amount in each pouch depends on the brand.

The main concern is consumption by children. According to the American Academy of Pediatrics, caffeine from the pouches is absorbed into the bloodstream and the effects are felt in minutes.

The pouches do not require spitting and are sold in multiple flavors, such as coffee, mint, fruit and seasonal options like pumpkin spice. Some health officials worry they can be mistaken by young consumers for candy or gum.

Unlike with caffeinated beverages, children and teens may use caffeine pouches more discreetly. The pouches are sometimes referred to on social media as lip pillows, lip cushies and upper or lower deckies, depending on where they are placed in the mouth.

Consumer trade groups and caffeine pouch makers, including ALP Pouch, declined to speak to The Associated Press about the products.

Caffeine has a range of possible side effects

Health organizations, including Nationwide Children’s Hospital in Columbus, Ohio, say too much caffeine can cause significant side effects, including tremors, anxiety, difficulty sleeping, seizures and other complications. Caffeine can remain in the body for more than eight hours depending on the person’s metabolism, according to the American Academy of Pediatrics’ Committee on Nutrition. When the effects of caffeine wear off, people can experience headaches, irritability and tiredness. The academy says avoiding caffeine is the best choice for children.

Caffeine pouches may worsen anxiety and sleep problems among teenagers already facing academic and social pressures, potentially affecting their mental health, academic performance and development, said Rob van Dam, a professor of exercise and nutrition sciences at George Washington University in Washington.

“You can get into a vicious cycle where kids just don’t get enough sleep for their normal development and mental health,” he said.

Health experts also worry that teenagers may lose track of their total caffeine consumption, particularly when combining pouches with energy drinks and other caffeinated foods and beverages.

Parents concerned about excessive caffeine consumption can contact the Poison Control Center Hotline at 1-800-222-1222. Seizures, difficulty breathing, collapse or severe heart-related symptoms warrant emergency medical attention, experts say.

Some schools are banning use of caffeine pouches by students

Nearly two-thirds of young people ages 12 to 19 consumed caffeine on a given day, according to a July report from the Centers for Disease Control and Prevention. Their average daily intake was about 31 milligrams, far less than the amount found in some caffeine pouches.

Some K-12 schools have taken precautionary measures to restrict use, such as banning caffeine pouches altogether, over concerns about student health, classroom distractions and the difficulty of distinguishing them from nicotine products. It remains unclear whether usage is increasing among American students, although some schools have reported seeing more of the products on campus.

School districts in New York, Kansas, Pennsylvania and Missouri have included caffeine pouches in student conduct policies or prohibited their use on campus. Other schools, including Onsted Middle School in Michigan and North Middle School in Wisconsin, have warned families to leave the products at home.

Holton High School in Kansas says staff cannot reliably determine what substances are inside the pouches, so they prohibit the products under its rules against tobacco and simulated tobacco products. Violations could result in disciplinary action or citations from law enforcement.

In New York, Peru Central School District officials also raised concerns about the nearly identical appearance of caffeine and nicotine pouches during a May 2025 school board meeting. The district’s code of conduct now prohibits caffeine pills and pouches on school grounds.

“The real issue for us as a school, in the middle and high schools in particular, is that when students are using pouches it’s impossible for us to know what the pouch is,” Joha Battin, associate director of student services for the school district, said during the meeting.

Federal nutrition standards generally prohibit schools from selling caffeinated beverages to elementary and middle school students during the day, but those rules do not restrict what students bring from home, leaving districts to decide whether caffeine pouches belong in classrooms and how to enforce restrictions on products that closely resemble nicotine pouches.

On Thursday, the company, founded in 2020 by former Wall Street engineer Daniel Simon, announced a $35 million growth equity round that closed in October. It plans to use the funding to build out a platform that helps businesses manage employee spending, facilitate payments to vendors, and automate accounting tasks. 

“If you run a plumbing business or an HVAC… and you need to give the technician who works for you the company credit card when they take the van out to go to their job… you need really specialized control, security, visibility, [and] reporting,” Simon, who serves as Coast’s CEO, told Fortune.

It works like this: A worker picks up a company card and checks in by text or app. That links the card to their identity and the spending limits their employer has set. Coast can then use vehicle location data to check whether the company van is at the gas station where the card is used—and block the purchase if it isn’t. Once a purchase goes through, the software sends the transaction details to the company’s accounting system, so office staff have fewer records to enter and match by hand.

Thomvest Ventures led the growth equity round, joined by new investors Intuit and Small World Capital. Returning backers included ICONIQ Growth, Accel, Insight Partners, Better Tomorrow Ventures, Avid Ventures, Vintage Investment Partners, Synchrony, RXR, and The Fintech Fund. The funding follows Coast’s Series B, which raised $40 million, and an earlier $92 million funding round. Coast declined to disclose its latest valuation.

The workers behind the AI boom

Though artificial intelligence promises to automate office work, its growth depends on workers who build data centers and upgrade power grids. U.S. demand for skilled trades is growing three times faster than for desk jobs, with openings for heating, ventilation, and air conditioning technicians up 78% and broader trade postings up 30%, according to a March report by staffing company Randstad USA. Its research also found that 102 workers leave the trades for every 100 who enter, putting pressure on businesses to do more with fewer people. Coast sees an opportunity to sell payment tools to these businesses in a market it estimates at $120 billion.

“You are taking time that might have otherwise been spent [on] back office work and giving that back to the people in the trades to work on what they are really focused on,” Don Butler, managing director at Thomvest Ventures, told Fortune.

Simon first saw an opportunity to tap into this market during the height of the pandemic, shortly after he sold his previous payments startup, Bread, for $500 million in 2020. The sale marked the latest milestone in a career that began on Wall Street, where Simon built trading software for investment banks and hedge funds before earning law and business degrees from Yale University.

But while banks and tech companies used modern software, he saw plumbers, electricians, and heating and cooling technicians rely on payment tools designed before smartphones existed.

Today, Coast has about 135 employees across its New York headquarters and a Utah office, and serves thousands of businesses, including Tristate Plumbing, Texas Solar Outfitters, and Verde Property Services. The company is not yet profitable and says it prioritizes growth, with revenue reinvested in its products and efforts to attract customers.

“We also have no problem separating rich people from their money,” the U2 frontman said on The New York Times’ “The Interview” podcast in an episode released Oct. 17. “You know, as we say, rich people have feelings, too. If they want to pay very high prices, we’ve no problem.”

But Bono, 66, also made a rarer admission for a rock star about to launch a stadium tour: Many fans are probably overpaying. “If they’re in America, we want people to feel really good about the choice to pay a ticket—and probably pay too much for it—to see us,” he said, as Business Insider first highlighted.

The comments come as U2 opens presales for its Greatest Show on Earth world tour, which kicks off Feb. 23 in Mexico City. The band was also just named the halftime act for the NFL’s first Thanksgiving Eve game, which streams on Netflix on Nov. 25.

U2 says it keeps the best seats cheap

Asked how much control the band has over ticket prices, Bono said “very little.” What U2 can do, he said, is protect the most coveted spots. “What we do in our band is we take the best seats in the house—we’ve done this all our life—and make sure that they’re often the most affordable,” he said.

That approach goes back decades. When U2 announced its Vertigo//2005 tour, the band said general admission floor tickets, pitched as offering the best view in the house at the lowest price, would cost $49.50 in North America, plus service fees.

Other artists have tried similar moves. Olivia Rodrigo, for example, set aside $20 tickets for her GUTS tour, though it was unclear how many were available.

From $140 to more than $1,500

The gap between U2’s cheapest and priciest tickets has grown since 2005. For the band’s 2023–24 residency at the Sphere in Las Vegas, tickets started at $140 including taxes and fees, according to Sphere Entertainment. The band said 60% of tickets would be priced under $300, alongside a limited number of premium seats. General admission floor tickets could not be transferred and could be resold only at face value, a rule meant to curb scalping.

At the top end, seats in the residency’s (RED) Zone sold for $600, according to Las Vegas station KLAS. The (RED) Zone was a VIP riser near the stage, and part of the proceeds went to the anti-AIDS organization Bono co-founded.

Pricing for the 2027 tour follows the same tiered model. In São Paulo, base prices before online fees range from R$500 (about $100) for a “Fan Ticket” to R$7,547 (about $1,510) for an Ultimate VIP Hospitality package, TicketNews reports, citing Ticketmaster Brazil. The Fan Ticket buyer’s spot in the stadium isn’t revealed until show day. General admission floor tickets cost R$790 (about $158). North American and European dates have been promised but not yet announced.

Why concert tickets keep getting more expensive

Artists, promoters, venues, and ticketing platforms all take a cut of each ticket. But much of fans’ anger has landed on Ticketmaster.

In April, a federal jury in Manhattan found that Live Nation and its Ticketmaster subsidiary illegally maintained monopoly power. The jury also found that Ticketmaster overcharged fans $1.72 per ticket.

33 states and the District of Columbia brought the case to a verdict after the Justice Department struck a settlement a week into the trial. The states are now seeking to break up the company. Live Nation has said the verdict is “not the last word” and that it will appeal any unfavorable rulings. (For more on what the verdict means, read Fortune’s analysis.)

Ticketmaster also faces a separate lawsuit from the Federal Trade Commission and seven states. That suit alleges Ticketmaster knowingly let brokers use thousands of accounts to get around ticket limits, then profited when those tickets were resold on its own marketplace. According to the complaint, an internal review found that just five brokers controlled 6,345 Ticketmaster accounts holding 246,407 tickets.

A federal judge refused to dismiss the case last month. In an Oct. 13 filing, Live Nation called the suit “misguided.”

Dynamic pricing, in which prices rise with demand, has drawn criticism too. Ticketmaster has long said artists and promoters set those prices. The issue drew government scrutiny in the U.K. after Oasis reunion tickets surged well past their advertised price.

What Bono didn’t say is how many cheap seats near the stage U2 actually offers. TicketNews notes that low-priced allocations like Brazil’s Fan Tickets are often small and tend to sell out early in a sale. That leaves most fans choosing between full price and the resale market.

Not since the Gilded Age—when, in 1885, railroad stocks accounted for more than 80% of active trading on the New York Stock Exchange—has the U.S. economy wagered so much on a single theme. When that bubble burst in the Panic of 1893, a third of railroads went bust, more than 500 banks failed, and the economy plunged into a four-year depression.

Today’s frantic AI buildout may be on a similar trajectory. AI-related capital spending has surged to about 2% of U.S. GDP, from near zero five years ago. But this time, the AI wager is concentrated in far fewer companies than the railway mania ever was.

In January, the Federal Reserve Bank of St. Louis reported that investments in information processing equipment, software, research and development, and data centers—four investment categories economists consider the closest proxies for AI investment—accounted for 39% of U.S. economic growth in the first three quarters of 2025, higher than the 28% those activities contributed in 2000, the peak of the dot-com boom.

Pantheon Macroeconomics calculates that without AI spending, U.S. corporate investment in equipment was negative last year.

Consumption, too, is heavily dependent on AI. The top 20% of income earners now account for approximately 60% of all U.S. consumer spending, according to Moody’s Analytics. The source of their wealth? The AI stock rally.

One theme, every market

AI has become the dominant theme across all segments of U.S. capital markets.

In equities, the “Magnificent Seven”—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla—boast a combined $25 trillion in market capitalization. That’s 35% of the value of the S&P 500 and the highest concentration in a handful of stocks since just before the crash of 1929.

Separately, research from the Federal Reserve Bank of Kansas City shows that AI-related companies’ share of investment-grade bond issuance increased from 2% in 2023 to 10% in 2026, highlighting the growing concentration of this kind of borrowing in credit markets.

In venture capital, AI captured 81% of a record $300 billion in global venture funding in the first quarter of 2026, and just four companies—OpenAI, Anthropic, xAI, and Waymo—absorbed two-thirds of the total.

The result is a self-reinforcing loop. Hyperscalers will spend $800 billion this year on chips, data centers, and the power to run them, propping up GDP growth. Investors are bidding up AI stocks, fattening the portfolios of the richest 20%, whose spending boosts consumption. As the buildout outgrows hyperscalers’ cash flow, new investment is increasingly financed by debt and off-balance-sheet partnerships.

The U.S. growth engine now runs on a narrow set of mutually reinforcing drivers. If one stalls, the others lose power too.

The Bank for International Settlements warns in its 2026 Annual Economic Report that AI exuberance risks ending in a “lengthy investment bust.” The BIS flagged “circular financing” as a core vulnerability, more than half of investment in AI firms comes from other AI firms, with recipients using that money to buy their backers’ products. Profits are being funded by investors rather than end customers.

The late handoff

America’s AI bet is underwritten by a single assumption: That by 2027, growth driven by infrastructure will hand off to growth driven by AI-powered efficiency gains across the broader economy.

I think that’ll come much later than the market expects.

As I argued in Fortune a few weeks ago, five decades of digital innovation achieved broad consumer adoption yet came with a decline in aggregate productivity growth. This is the Innovation Paradox: more innovation and slower growth.

Technology diffusion follows a double K-shaped pattern. Consumers adopt almost immediately; enterprises, at a glacial pace. Within enterprises, a handful of superstar firms embrace new technologies quickly while the rest struggle to make use of them.

The structure of the U.S. economy makes things even worse. The U.S. has shifted from vertically-linked industrial sectors—where innovations could naturally travel through supply chains—to horizontally spread service sectors that resist transformation because they depend on human judgment. These “stagnant” sectors, as the economist William Baumol called them, now account for roughly half of GDP in advanced economies.

Firms are also saddled with debilitating administrative and regulatory compliance costs, which I estimate are now past the topping point at which they strangle innovation.

Adding to the paradox: the concentration of capital in AI-linked companies starves the rest of the economy of investment needed to be AI-ready. If hospitals, schools, logistics companies, and retailers can’t invest in digital infrastructure and workforce retraining, the broad-based productivity gains that justify today’s AI valuations will never arrive.

AI could still defy the paradox: unlike previous digital waves, it is a cognitive technology that can reason and make judgments, precisely what’s needed to unlock productivity in labor-intensive Baumol sectors. But only deep adoption across a broad spectrum of the economy will realize that potential. Firms need to allocate capital to workers and workflows, not just chips and data centers.

That’s a possible silver lining if the AI bubble bursts—that the assets financed by irrationally exuberant investors end up reshaping the economy for the better. Canals in the 1830s, railroads in the 1880s, electrification in the 1920s, telecoms and the internet in the late 1990s—each ended in painful collapse, yet the physical infrastructure created in those speculative booms laid the foundations for decades of later prosperity.

Will data centers, semiconductors, and AI models prove equally long-lasting? Perhaps. But that process will take decades, not months or years. In the short term, the more concentrated the bet, the more severe the potential reckoning.

No prior bubble spanned so many dimensions of the economy simultaneously—GDP growth, consumer spending, equity markets, debt markets, and venture capital all tethered to a single theme.

That is not an economic launchpad. It is a vulnerability of historic proportions.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

On Wednesday as Meta released third quarter earnings results, the company announced that it would issue a new share class of Class C stock. The share class, which is technically a one-for-one stock dividend of new Class C shares, will be distributed to all shareholders. It was conceived following months of extensive negotiation that grew contentious at times between Zuckerberg and board members, including DoorDash CEO Tony Xu, Ambassador Robert Kimmitt, and ex-Microsoft executive Charles Songhurst. Xu disclosed his personal friendship with Zuckerberg but said it wouldn’t impair his judgement. At one point, the committee even talked about resigning if they couldn’t come to a resolution.

According to a Meta filing with the Securities & Exchange Commission, Zuckerberg wanted to be able to maintain his voting control, meet his pledges to fund the Chan Zuckerberg Initiative with his Meta stock, and be prepared to pay billions to the state of California if a proposed wealth tax is approved by voters in November. 

The proposed wealth tax, however, came around the same time as a decision by the company in late 2025 that Meta needed to raise outside capital to help fund the AI boom. Zuckerberg holds about 60.6% of voting control at Meta, while his stake is about 13.4% of the company. 

Like other major tech companies, Meta maintains a dual-class share structure, where Class A shares trade on Nasdaq as a one-vote-one-share stock. Conversely, Zuckerberg’s holdings are made up of mostly Class B shares, which carry 10 votes per share, which is how he maintains majority control. The condition on the supercharged Class B shares is if Zuckerberg sells them, they convert to Class A. Many companies require this condition for super-voting shares to ensure that outsiders don’t start to gain control of companies from founders seeking liquidity. 

The rub is if Meta issues more Class A shares, which it does in order to make equity grants to employees, make acquisitions or raise capital, Zuckerberg’s stake gets diluted. Meta has long offset the dilution with stock buybacks, which helped buoy his voting power from 53.7% in 2013 to 60.6% now. But the buybacks also drain cash that Meta wants to use to fund the AI buildout. The company’s SEC filings show Meta repurchased $26.3 billion in Class A stock in 2025, but hasn’t bought back any shares in four straight quarters. Meanwhile, in the first nine months of this year, Meta posted $21 billion in stock-based compensation.

Meta’s third quarter results, released Wednesday, help explain why the share class came about. Revenue this quarter rose 26% to $64.6 billion while capital expenditures hit $34.9 billion. Meanwhile, free cash flow dipped to negative $2.1 billion, compared to $10.6 billion a year ago. Meta also forecast capex for 2026 at $135 billion to $140 billion, raising the low end up from $130 billion. Meta forecast fourth quarter revenue of $73 billion to $76 billion. 

As a solution to the crunch, the new Class C stock will carry no votes, the company said. Meta will use them to pay employees, fund acquisitions, and raise capital without Zuckerberg losing majority voting control. He can also sell some of them without giving up votes, and more importantly, pay a potentially massive wealth tax bill looming in California without having to tap into his Class B shares. His current level of control is such that he can personally elect all the directors on the board and determine most of the issues proposed to shareholders for a vote, which won’t change following the recapitalization. With the new shares, Zuckerberg can sell 20% right away, and the remaining 80% are “stapled”—meaning he can sell them only if he sells or converts an equal number of his voting shares. 

Proposition 40 in California, known as the wealth tax, is up for a vote on Nov. 3 and if it passes, it could hit Zuckerberg and the wealthiest in the state with a multibillion bill. The Bloomberg Billionaires index lists him at #5 with a net worth of $246 billion. In July, Zuckerberg told Kimmitt, who is Meta’s lead independent director, that selling his Class B stock to cover what he might owe for the wealth tax could cut his voting stake back down to 53%.

The tax came up in a conversation between the two after negotiations between Zuckerberg and the committee appeared to grow tense. The committee had suggested shareholder-friendly sunset provisions that would see the Class B shares convert into regular stock within a year of Zuckerberg’s eventual death or departure from Meta—or if he sold more than half his holdings. During a call with Kimmitt in July, the two discussed the wealth tax and noted that Zuckerberg had only taken a $1 salary from Meta since 2013. 

Later that same month, Zuckerberg again brought up Prop 40, this time raising concerns about whether it might impact his ability to stay a California resident. The following week, Zuckerberg’s lawyers sent a letter asking for a pay package similar to those made to other tech founders, partly so Zuckerberg could pay a potential tax bill. Like SpaceX and Tesla CEO Elon Musk, many founders in tech have moonshot performance pay packages, in which rigorous stock price growth is tied to massive pay hurdles. According to the filing, Zuckerberg refused to consider any changes to his voting shares, including sunset provisions, and told the committee he was “considering establishing residence outside of California.”

The next day, the committee hashed over Zuckerberg’s stance and went over Meta’s analyst coverage and commentary, and the tightening of credit conditions for hyperscalers. Meta had seen relatively looser demand for its July bond issuance for a Texas data center. The committee wanted to keep Zuckerberg in California, close to its artificial intelligence lab. 

Later that same day, August 4, Zuckerberg proposed a dividend of 20 shares of Class C stock for each share of Class A and B shares, paid to all shareholders. He told the committee he wouldn’t agree to sunsetting his Class Bs or support equity financing that diluted his voting control.

Then, he upped the stakes.

Zuckerberg told the committee “he intended to establish residence outside California, which he had been advised he would need to do before the November. 3, 2026 election,” the filing states.

The committee met again August 5, but viewed the 20-for-1 proposal as “excessive,” the filing states. By late August, all sides were dug in after various proposals had been issued and objected to. Eventually, committee members discussed dissolving the committee or resigning from the board if Zuckerberg wouldn’t make concessions for the benefit of all Class A shareholders. 

At a September 9 board dinner, Zuckerberg told directors he planned to list his Palo Alto estate for sale on September 13. Committee members had recused themselves from dinner during his update. And then within days, a new proposal came together. Zuckerberg dropped his pay request and agreed to keep the $1 salary and committed to stay in California or wherever Meta is headquartered, for eight years. All shareholders get another one-for-one Class C dividend every time the stock price doubles from $580.60, so long as annual returns are at least 10%.

The deal was inked on September 14. Every Class A and Class B share will get one Class C share, effectively a two-for-one split and Zuckerberg can sell 20% of his new Class C shares right away. The committee approved days before the full board sealed the deal on October 19. Chan Zuckerberg entities that hold 56% of the vote signed off the following day and the new shares take effect on Jan. 19, 2027.

Chief financial officer Susan Li said Wednesday trading of the Class C stock will begin in late January. She said Meta has no specific financing plans yet. 

“We thought it was prudent to establish the appropriate capital structure framework to ensure that we have access to a diverse pool of funding sources,” she said during Wednesday’s call. 

Proposition 40, on California’s Nov. 3 ballot, would impose a one-time 5% tax on the net worth of the state’s few hundred billionaires who were residents on Jan. 1, 2026. The tax would be due in 2027, and those who choose to spread payments over five years would pay more. Real estate, pensions, and most retirement accounts would generally be excluded.

Benjamin Jaros and Joshua Rauh, economists affiliated with Stanford University’s Hoover Institution, see a much smaller payday. In a working paper published this month by the National Bureau of Economic Research (NBER), they estimate the tax would collect about $30 billion, in a range of $28 billion to $36 billion. That is less than a third of what proponents expect.

Their main explanation is simple: Billionaires can move.

The researchers used Forbes billionaire rankings, real estate reports, and public relocation announcements. From those, they estimate that billionaire departures have already eliminated nearly 30% of the proposed tax base. Seven billionaires who have publicly moved out of California account for roughly $540 billion in wealth, CBS News reported, citing the study. They include Peter Thiel and Google cofounders Larry Page and Sergey Brin. The estimate also discounts what remains of the base for the risk that courts strike the tax down.

The new figure is a sharper downgrade than the authors’ earlier Hoover analysis. That analysis projected about $40 billion in revenue and a $25 billion net loss for the state.

Why the Stanford economists see a $39 billion hole

Still, $30 billion is hardly pocket change. The researchers’ bigger concern is what happens after the state collects it.

They estimate that billionaire departures could cost California $1 billion to $3.5 billion a year in lost income tax revenue. If those losses continue indefinitely, the future shortfall would outweigh the one-time wealth tax proceeds by $38.9 billion in today’s dollars. The researchers ran 100,000 simulations using different revenue and discount-rate assumptions, and 85% produced a net loss for the state.

Those losses are projections, not money California has already forfeited. And announcing a move is not the same thing as escaping the tax. The tax is based on residency as of Jan. 1, 2026, so a public relocation announcement alone does not establish whether someone would owe it. Economists who helped design the measure argue that some high-profile “leavers,” including Brin, likely remained California tax residents on that date because of their ongoing ties to the state.

The union sponsoring the measure, SEIU–United Healthcare Workers West, disputed the research. It told CBS News the proposition is meant to prevent the collapse of California’s health care system.

Other economists say the losses won’t last

As Fortune reported in May, a separate NBER study by economists Jasper Boll, Emmanuel Saez, and Gabriel Zucman reached a different conclusion. Even in an extreme scenario where every billionaire permanently left the state, it would take roughly 25 years for accumulated income tax losses to match the proposed $100 billion windfall. Saez provided unpaid advice on the ballot measure’s design.

In an August revision, the authors raised their estimate of what California billionaires paid in state income taxes in 2025 from $4.1 billion to $4.3 billion. The revision also challenges the Stanford approach directly. The authors argue it is inconsistent to treat the wealth tax as one-time while treating the migration it triggers as permanent. If California does not introduce further wealth taxes, they argue, some billionaires could eventually return, and newly created fortunes could help replenish the state’s billionaire tax base.

California’s nonpartisan Legislative Analyst’s Office offers a third view. It expects the tax to generate tens of billions of dollars over several years while potentially reducing annual income tax revenue by less than $1 billion.

The debate comes as America’s wealth gap continues to widen. The richest 1% of U.S. households held a record 32.5% of the nation’s total net worth in the second quarter of 2026, up from 31.1% a year earlier, according to Federal Reserve data. The bottom half of households, meanwhile, held just 2.3%, down from 2.4% a year earlier.

A $340 million fight, and a governor on the other side

The proposed tax has already sparked an expensive political battle. Tech billionaires have raised more than $340 million to oppose the measure and support related ballot initiatives, according to the Guardian, which reviewed campaign finance disclosures. Brin, the largest donor, has given more than $100 million. Other donors include former Google CEO Eric Schmidt, Palantir cofounder Peter Thiel, Stripe CEO Patrick Collison, and DoorDash CEO Tony Xu.

The opposition campaign spent at least $21.2 million in the first 19 days of September alone.

California Gov. Gavin Newsom also opposes the tax, arguing it could drive wealthy residents and their income tax payments out of the state. On Oct. 9, he endorsed Proposition 42, a Brin-funded competing measure. Prop 42 would bar retroactive taxes and ban new state taxes on personal property, effectively blocking Prop 40. Newsom has instead proposed a national minimum tax on Americans worth more than $100 million.

Prop 42 and a second countermeasure, Proposition 41, could each nullify the billionaire tax if either receives more yes votes than Prop 40. Voters appear split on the tax itself: A recent Citrin Center–Politico poll found 46% of likely voters in favor and 43% opposed.

Not every billionaire is heading for the exit

Nvidia CEO Jensen Huang, a longtime California resident, said he would be comfortable paying an estimated $8 billion in taxes over five years. He called that ability a privilege, as Fortune reported Tuesday. Huang has also urged people to move to California rather than leave.

Voters will decide whether to impose the tax on Nov. 3. Even if it passes, competing measures could keep it from taking effect, and it could take years to determine whether it ultimately leaves California better or worse off.