Panmure Liberum strategist warns of potential AI bubble burst by 2027

Joachim Klement, a market strategist at Panmure Liberum, has warned that the artificial intelligence investment boom could result in a market collapse similar to the 2008 financial crisis. Klement predicts the AI bubble may burst between 2027 and 2028, driven by the exhaustion of free cash flow among hyperscale computing companies and rising debt costs that are becoming prohibitive.

Klement’s projections suggest a significant downturn for major indices. He forecasts the S&P 500 could drop to 5,000 points by the end of 2027, representing a 36% decline from current levels. Additionally, he anticipates the European Stoxx 600 could fall to 430 points, a decrease of more than 30%. This outlook is notably more pessimistic than other analysts surveyed by Bloomberg, who project an average potential increase of 14%.