Wall St. Sounds Alarm on AI-Driven Boom

Wall Street is increasingly warning that the artificial intelligence trade may be overheating.

Valuations and credit spreads supposedly remain stretched. (Photo: New York Stock Exchange Facebook)

After months of record gains in AI-linked stocks and corporate spending, concerns are mounting that the boom is beginning to resemble a bubble, Allie Canal reported for Yahoo Finance.

JPMorgan CEO Jamie Dimon echoed that tone of caution while speaking to reporters, calling elevated asset prices “a category of concern.”

He added, “When asset prices are elevated, you have further to fall.”

Dimon noted that while “consumers are still spending [and] companies are making money,” valuations and credit spreads remain stretched. “You have a lot of assets out there which look like they’re entering bubble territory,” he said.

“That doesn’t mean you don’t have 20% to go — it’s just one more cause of concern.”

That caution comes as new sentiment data shows investor exuberance reaching extremes.

Bank of America’s latest Global Fund Manager Survey, released Tuesday, cited an “AI equity bubble” as the top global tail risk for the first time in its history.

The survey, which polls roughly 200 fund managers overseeing nearly $500 billion in assets, also found cash levels falling to 3.8%, near BofA’s “sell” threshold of 3.7%. Historically, readings below 4% have marked periods of peak risk appetite — often surfacing late in the market cycle.