Stocks are in a late-stage bubble and poised to crash 21% next year, while Treasury yields above 5% will signal a new era of tight money, analysts say

Analysts predict that the AI-driven stock market boom is set to end soon, with the S&P 500 expected to plummet 21% by the end of 2027. James Reilly, a senior markets economist at Capital Economics, expressed concern over the late-stage bubble, citing that key factors are nearing levels seen during past stock market peaks. Some of these indicators include high stock valuations, unsustainable earnings growth, and a lack of sustainable AI investment.

Rockefeller International Chairman Ruchir Sharma has added another concern to the mix, warning that the AI bubble could pop when the 10-year Treasury yield surpasses 5%, as this would signify a new era of tighter money.