Wall Street analysts warns the AI boom is on 'borrowed time'
The artificial intelligence-driven stock market rally may be entering its final stage, according to a new assessment from Capital Economics. The Wall Street firm has therefore warned that the surge in AI-related equities is showing signs of excessive optimism despite further near-term upside potential. The research firm expects the S&P 500 to continue benefiting from strong AI-related earnings momentum through the rest of 2026, with the benchmark index projected to reach 8,250 by year-end. However, Capital Economics believes the gains are becoming increasingly disconnected from underlying fundamentals and forecasts the index will retreat to about 6,500 by the end of 2027. “We think the AI rally is approaching its last stage but is probably not quite over yet. Accordingly, we expect the tech-heavy equity markets, such as those in the US, Korea, and Taiwan, to continue to outperform over the remainder of this year. But we expect them to fall, in some cases quite sharply, next year. Our baseline scenario is that the S&P 500 ends 2026 at 8,250 but drops back to 6,500 by the end of 2027,” the firm said. The firms caution centers on valuation levels that have climbed sharply since the AI boom began in early 2023. Capital Economics noted that the









