Futurism88%
Bank of America Warns That AI Investors Are in for a Nasty Reality Check 80%
By Victor Tangermann83%
7/7/2026, 5:51:56 PM
Keywords: AI Bubble, Bank Of America, Stock Market, Investors, Artificial Intelligence, Speculation, Valuation, Snapback, Reality Check, US Economy, Great Depression, Shiller Cape Ratio, Black Tuesday, Market Sell Off, Spacex, International Markets, Volatility, Froth, Rally, Turbulence, Optimism, Morgan Stanley, Goldman Sachs
BS Summary: This article contains 23 faulty reasoning types, including Biased Writer Voice, Appeal to Emotion, and Post Hoc (False Cause), with Appeal to Authority as the most egregious example at 39.8% saturation with 161 hits. Analysis detected 1,394 faulty-reasoning hits from 405 analyzed words, generating a BS Score of 71.5% and a BS Rank of 80% (4,264 of 20,517 articles). This article is worse (more manipulative) than 79.20% of the article peer group.
Tech companies are running hot, with Wall Street investors sustaining multi-trillion dollar valuations despite subdued earnings.
Companies heavily invested in AI are particularly challenged on that front, thanks to heavy data center spending that isn't yet — and may ever — result in sizable profits.
The gap between those companies' valuations and their ability to actually make money continues to grow at a breakneck pace, terrifying analysts.
The S&P is up a whopping nine percent so far this year, wrapping up its best quarter since 2020 at the end of last month, as Fortune reports.
But what comes up must come down.
In a Tuesday note, Bank of America warned that "speculation is hitting extreme levels as high multiple stocks have gapped up demonstrably, an event that has historically preceded a valuation 'snapback.'"
In other words, Wall Street could be in for a nasty reality check.
Meanwhile, experts warn that the US economy could be in an even worse shape than right before the Great Depression of the late 1920s.
As the Telegraph's economics columnist Russ Mould pointed out, US stocks are currently priced on average 41 times their average earnings over the last decade, an indicator called the Shiller CAPE ratio.
To put that number into perspective, the ratio was just 32.5 on Black Tuesday, the day of the worst financial disaster in modern history almost 100 years ago.
The fretting comes after some major turbulence.
A major sell-off rocked the S&P 500 towards the end of June, wiping out hundreds of billions of dollars in market value.
Even Musk's SpaceX, which had gone public mere weeks earlier and is now top-heavy with AI spending itself, was caught up in the downturn, plummeting back down to its starting price of $150.
International markets have also seen massive swings, particularly in Asia, which could indicate troubling days ahead.
"This volatility is, in our view, evidence of excessive froth and calls into the question the sustainability of this rally," Capital Economics analysts told Fortune.
Expect turbulence.
For the time being, many investors are as optimistic as ever.
Just this week, SpaceX received extremely bullish ratings from Morgan Stanley and Goldman Sachs, with price targets of $300 — twice the space company's current share price — and $205, respectively.
More on the AI bubble: There’s an Urgent Sign of an Impending Market Collapse
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3speakers22%attributed speech317writer words
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100%flagged-word coverageBank of America
31 attributed words35% of attributed speech100% writer coverage
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