Stocks related to artificial intelligence set for imminent collapse predicts Wall Street expert within the next year and a half.
In a recent warning, Wall Street analyst Gordon Johnson has predicted that the current AI boom could collapse within the next 18 to 24 months, drawing a direct parallel to the Dot-com bubble of 1999-2000. Johnson argues that the current AI frenzy bears resemblance to the speculative mania that fueled the late 1990s internet bubble, with significant spending not yet justified by meaningful cost savings or new revenue streams from AI technologies.
Johnson's prediction is based on his belief that AI products are likely to experience high-profile failures in the near future, such as catastrophic software errors or systemic financial misadvice, which would undermine confidence. External economic shocks like tariffs or inflation could also hasten the unraveling of the AI boom.
Johnson compares the current AI spending to the speculative mania of the late 1990s Dot-com bubble, stating that "really smart money guys" agree that the current AI market is a bubble. However, he acknowledges that the AI sector and the Dot-com bubble operate on fundamentally different grounds.
While the broader tech rally might persist in the short term, Johnson sees the current AI enthusiasm more as a flashy novelty than a proven business driver. He expects a significant correction once real-world results fail to materialize.
The rise of AI leader Nvidia is supported by real demand for its AI chips, unlike the hype-driven rally of Cisco in the 1990s. Despite promising long-term potential, current excitement may be premature absent robust, scalable value creation.
The warning was made in an X post on July 15, and it underscores the need for companies to demonstrate tangible benefits from AI investments to maintain investor confidence. As the AI industry continues to evolve, it remains to be seen whether Johnson's prediction will come to pass or if the sector will weather the storm and deliver on its enormous promise.
[1] Johnson, G. (2021). AI Boom: A Bubble About to Burst? Retrieved from X Post. [3] Analyst Consensus: AI Enthusiasm Versus Real-world Results. (2021). Retrieved from Market Watch.
The current AI boom, as Johnson predicts, might collapse within the next 18-24 months, similar to the Dot-com bubble of 1999-2000. Johnson's comparison is rooted in the belief that AI products could face high-profile failures and that the sector's rapid growth may not be backed by significant cost savings, or new revenue streams from AI technologies.
