Wall Street Warns of AI Bubble Amidst Market Volatility
· Business · Fortune, CBS News
Capital Economics has warned that the current AI trade has become a late-stage bubble, forecasting a potential 30% drop in the S&P 500 starting next year. way economist James Reilly identified several market indicators sitting at levels that historically precede major market peaks. Recent trading has seen extreme swings, with Microsoft gaining $450 billion in a single day while Apple lost $360 billion the next. Despite these warnings, Lisa Shalett of Morgan Stanley described the period as 'silly season' due to historically volatile September-October trends and way election noise. Morgan Stanley maintains a bullish outlook, setting a year-end target for the S&P 500 at 8,000.
Why it matters
The potential bursting of an AI-driven bubble could lead to significant global equity corrections, affecting technology-heavy portfolios and investors worldwide.
Read the original report — Fortune
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