Analyst Predicts AI Bubble Burst Leading to Stock Market Crash

Global analyst warns of major stock market bubble

In early April, a global strategist at the banking giant Société Générale (EPA: GLE), Albert Edwards - notable for foreseeing the Dot-com bubble - weighed in on the matter saying that between FED not being restrictive enough, and optimism about the artificial intelligence (AI) boom, the stock market has become a full-blown bubble.

According to Edwards, the incredible enthusiasm surrounding AI firms - long described by major institutions as the biggest driver of the expected strong stock market performance in 2024 - is not particularly well-founded.

According to the analyst, once major companies like Nvidia (NASDAQ: NVDA) are excluded, the technology has failed to deliver strong earnings growth thus ensuring that the current sky-high valuation of many involved companies constitutes an AI bubble.

Finally, Edwards is also critical of the FED as he believes the central bank is not being restrictive enough and has, between keeping interest rates fixed for more than a year and turning its rhetoric decisively more doveish of late, tacitly helped further inflate the bubble.

Recessionary fears persist despite strong market performance

Despite things going well in the world of finance at first glance, there has, in fact, been an alarming number of voices from various positions warning of a looming crisis.

For one, the world’s largest bank by market capitalization and America’s biggest such institution, JPMorgan (NYSE: JPM) has estimated that there is still a 65% chance of a recession in mid-March and warned that stocks could crack at any moment later in the same month.

Additionally, the prominent investor and author of the best-selling personal finance book ‘Rich Dad Poor Dad,’ Robert Kiyosaki, has also been warning of a major and imminent stock market wipe for many months while advising his followers to find safety in commodities like gold and silver, and the world’s premier cryptocurrency, Bitcoin (BTC).