The AI bubble is leaking air, some economists say. Should investors worry?

Some Wall Street economists say the U.S. “AI bubble” that helped drive record stock highs may be nearing late-stage conditions. Capital Economics’ John Higgins told CBS MoneyWatch that the bubble’s “best guess” is that it begins to burst in 2027, with a potential S&P 500 correction—stocks falling at least 20% from recent highs—next year. Economists point to stretched valuations: James Reilly said AI companies’ projected earnings growth appears outpaced by U.S. economic growth, likening it to the dot-com era, even if AI is expected to remain transformative. Goldman Sachs projects global AI capex at $1 trillion in 2026, including $581 billion in the U.S., though EY-Parthenon cautions against overly confident bubble predictions.