The AI bubble is leaking air, some economists say. Should investors worry?
AI has fueled a stock boom in recent years. Now, some Wall Street analysts think that epic run is coming to an end.
September 14, 2026 / 2:58 PM EDT / CBS News
The AI bubble that has propelled U.S. stocks to record highs is starting to deflate, according to some Wall Street analysts.
"There are plenty of signs that we are now in the late stages of a bubble in AI," John Higgins, chief economic adviser for financial markets at Capital Economics, said in a report on Monday.
The investment advisory firm's "best guess" is that the AI bubble will begin to burst in 2027. Capital Economics also forecasts a correction, or when stocks fall at least 20% from their most recent high, in the S&P 500 stock index next year.
"If you look at the rate at which leading AI firms' earnings are expected to grow, versus how fast the U.S. economy has been growing, by many measures they look really stretched — as in this is the dot-com bubble all over again," Capital Economics senior markets economist James Reilly told CBS News. "And while we believe AI will be transformative and produce profits, we don't think they'll be as high as analysts are expecting."
In 2026, global capital expenditures on AI-related projects are projected to hit $1 trillion, including $581 billion in the U.S., according to Goldman Sachs. That boom has fueled an epic run for stocks over the last two years, with investors hopping on the bandwagon in anticipation of robust future profits from companies leading the way in AI.