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Economist Warns AI Boom Risks Bubble Burst by 2026

12/3/2025

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Story summary
  • Economist Ruchir Sharma warns the AI surge may resemble a bubble poised to burst in 2026.
  • He cites overinvestment, overvaluation, over-ownership, and over-leverage as signals of a potential collapse.
  • Rising interest rates could trigger the downturn by raising borrowing costs and lowering valuations of high-growth firms.
  • Sharma notes inflation remains high and the Federal Reserve may struggle to meet targets, a backdrop that argues for quality stocks as safer bets.