Joachim Klement, head of market strategy at Panmure Liberum, is warning that the current AI investment boom looks like a bubble likely to burst between 2027 and 2028. He projects the S&P 500 will fall to 5,000 by end of 2027, down from around 7,723 today, representing a decline of more than 35%. His core argument centers on shrinking free cash flow at major hyperscalers, Amazon, Microsoft, Alphabet, Meta and Oracle, whose combined 2026 capex is expected to reach $658 billion, requiring these firms to add $2-5 trillion in annual revenue to justify the spending. Panmure Liberum’s analysis compares the AI boom to the late-1990s dotcom bubble, which it already exceeds by 60%, with AI-related market gains reaching $28.6 trillion since April 2025.
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