Is the AI Stock Boom About to Disappoint? One Firm Says Yes

A research firm warns U.S. tech stocks may be in a bubble and could face a big test within a year. Here's what beginners should know.

Are U.S. technology stocks flying too high? One respected research firm thinks so — and it's warning investors to be careful over the next year.

MacroResearchBoard, a Montreal-based investment research group, believes that U.S. equities (another word for stocks, meaning tiny pieces of ownership in companies) — especially technology stocks — are in a bubble (when prices rise far above what companies are actually worth, and can suddenly crash).

Strategist Peter Perkins told clients there are "greater odds of investor disappointment than positive surprises in the year ahead." In simple terms: he thinks stocks are more likely to fall than keep climbing.

Here are the key points:

The firm sees a major test for technology stocks in the next 6 to 12 months
Semiconductors (the computer chips that power AI and other devices) could take a hit about a year from now
The firm suggests investors look at other regions instead: emerging markets (developing economies like India or Brazil), Japan, and the eurozone (countries that use the euro currency)

Why have stocks risen so high? The firm points to high liquidity — meaning there's a lot of money floating around in the economy. This happens when the money supply grows, companies borrow more, and — most importantly — when the cost of borrowing money is low compared to the profits investors can make.

This cheap-money situation has been common ever since the 2008-09 global financial crisis (a major worldwide economic crash triggered by the collapse of the U.S. housing market).

The article also mentions rising yields. A bond yield is the return investors earn from lending money to governments or companies. When yields rise, bonds become more attractive compared to stocks — which can pull money away from the stock market.

The takeaway: This firm believes the excitement around AI and tech stocks may have gotten ahead of reality. It's not predicting an immediate crash, but it's advising investors to prepare for possible disappointment and to spread their money into other parts of the world.

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/a-looming-ai-disappointment-and-rising-yields-why-one-research-firm-is-hitting-the-brakes-on-u-s-stocks-4bfaa67b?mod=mw_rss_topstories