Opinion: AI bubble 'end-stage' alarm heats up, US stocks may face over 30% correction

BlockBeats news, September 15 — Wall Street has recently seen warnings of "crazy markets" and "irrational season," with rising concerns over an AI bubble burst. Capital Economics believes that multiple current market indicators have approached levels seen at historical bubble peaks, and expects the S&P 500 to potentially begin declining next year, ultimately falling at least 30% from its high.

Recent sharp market divergence has also intensified concerns: on July 30, Microsoft's market value increased by $450 billion in a single day, while the next day Apple's market value evaporated by $360 billion and Amazon added $388 billion. Data from Acadian Asset Management shows that the degree of volatility divergence among U.S. individual stocks has risen to its third-highest level in nearly 2,850 trading days, trailing only the 2020 vaccine rally and the 2025 DeepSeek shock.

Meanwhile, the Federal Reserve may raise rates by 25 basis points on Wednesday, which would be its first hike since July 2023. UBS expects the Fed to ultimately approve the hike by a 10-2 vote, with two officials possibly dissenting. If the Fed further tightens policy, Capital Economics believes this would make the current AI rally more similar to the internet bubble around 2000. It noted that capital expenditure by hyperscale cloud computing companies continues to surge, and it is expected that the free cash flow of the four major hyperscale cloud service providers will turn negative in 2027, with AI bubble risks further accumulating.