AI Bubble Fears: $200 Billion Loss Scenario and Market Crash Risks

The Financial Times warns that the artificial intelligence investment boom may be forming a stock market bubble, with a worst-case scenario projecting losses of $200 billion and a 30% drop in US stocks. Tech shares have already suffered significant declines. On Thursday, November 5, the Nasdaq fell about 5%, its largest daily drop in 19 months, with AI infrastructure companies hit hardest. CoreWeave lost 10% in one day and is down 70% from its May high, while Sandisk and Micron fell 22% and 17% respectively. The BIS notes that nearly 29% of AI investment deals involve companies funding other AI firms, creating dangerous interdependence. Local US opposition to data centers is also raising costs and delays, while investors question whether massive spending will translate into profits.