The top dogs are seeing what you’re seeing: They think the stock market is getting too high on its AI supply and a reckoning is on its way.
Speaking at Italian Tech Week in Turin, Amazon founder Jeff Bezos argued that AI is an “industrial bubble” and that, “Investors have a hard time in the middle of this excitement, distinguishing between the good ideas and the bad ideas.”
Bezos isn’t the only one calling the top. Goldman Sachs CEO David Solomon didn’t mention the word “bubble” when speaking at the same conference today, but noted that equities will face a “drawdown” within the next couple of years. Solomon compared the current moment to the rise of internet stocks in the late ’90s and early 2000s, predicting, “There will be a lot of capital that’s deployed that will turn out to not deliver returns, and when that happens, people won’t feel good.”
Zoom out: Investors have pushed a select group of tech companies to eye-popping valuations. Just yesterday, OpenAI became worth $500 billion in a secondary share sale, and Palantir is trading at 137x sales. While bulls believe that the tech will be as transformative for the economy as the invention of electricity, there’s a lot riding on that hope. Nvidia, which recently hit a $4.6 trillion market cap, accounts for about 8% of the S&P 500’s market weight, meaning if the AI domino falls, it’s bringing the whole market down with it.
But…could a bubble be a good thing?
Both Bezos and Solomon added major caveats to their AI warnings—they’re still bullish on the technology in the long term. Bezos argued that the tech is “real” and will ultimately have a “gigantic” benefit to society.
Solomon was similarly optimistic. He said that the current economy is “still in pretty good shape” and will accelerate into 2026 due to government spending and the AI buildout.
Big picture: According to Bezos and Solomon, the AI transformation won’t always be up and to the right, but a longer slog that crowns some winners and many other losers. “We are at the beginning of the movie, not the end of the movie,” Solomon added. Hopefully, this one has a happy ending. —LB
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