AI Bubble Fears: In the world of rapidly changing technology, big ups and downs are being seen with the advent of AI. On one hand, companies laid off thousands of employees, while on the other hand, huge investments are being made in AI. It is clear from this that the ways of working are going to change in the coming times. But warnings continue to emerge about AI—it is being called a ‘bubble’ that could burst at any time. Many experts in the technology world have indicated that there is a possibility of a bubble in AI.

Why is AI being called a ‘bubble’?

Recently, Google CEO Sundar Pichai cautioned users about the use of AI. He said that do not trust AI blindly. Besides, he also advised the companies investing in AI to be cautious, calling it a bubble which if bursts, no one will get a chance to escape.

OpenAI founder Sam Altman and Microsoft founder Bill Gates have also given similar warnings. AI is being compared to the dot-com bubble of 2000—when there was a lot of excitement about the rise of the Internet, investments were growing rapidly, but suddenly the bubble burst and investors suffered huge losses. Today the same over-enthusiasm is visible about AI, that is why the discussion about the bubble is intense.

Is there any merit in the claim of AI bubble?

Due to AI, there has been a sharp rise in the shares of tech companies in the stock market. Market experts fear that if this bubble bursts, it could have a direct and deep impact on the global stock markets. A big question is that it has been three years since AI came into prominence, so why this debate now? Actually, this discussion has increased after the latest reports of many companies.

The big seven companies listed on the US stock market—Apple, Microsoft, Google, Meta, Tesla, etc.—alone hold about 34% of the total market cap. More than half of the stocks that rose the most last year belonged to these companies. Therefore, the decline in these companies will have a direct impact on the entire stock market.

Learning and using AI is important, but investing solely on AI models or AI-powered predictions can be risky. If this AI bubble actually bursts, the possibility of huge losses cannot be ruled out.

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Since Donald Trump became the US President, he has made many such announcements, including tariffs, which have a stir in the international market. Meanwhile, there may also be a threat of further recession in the US market. It is believed that the iconic brokerage firm Goldman Sachs.

He says that there is no scope for a lot of increase in the US market in the year 2025, because its experts have reduced the target of the main index S&P 500 hundred for the second time this month. The reason for this, he has explained the possibility of increasing recession and the ongoing uncertainty about tariffs.

The S&P 500 index measures the performance of the 500 largest listed companies in the US. The team of David Costin -led Goldman Sachs now also believes that by the end of the year, the level of S&P 500 will be around 5,700. Whereas, earlier he had estimated it to go up to 6,200.

US stock market estimated to fall

Costin wrote in his note that due to falling growth and increasing uncertainty, the stock has become more risky than before. Their valuation is decreasing. The new estimate is just 2 per cent higher in the level released after Friday and is one of the lowest estimates of Wall Street.

If the growth and investors confidently fall, then prices can fall even more than our expectation. He had earlier reduced the target of March 11 from 6500 to 6200. Especially in view of the fall in the prices of technology shares this year.

Tariff Policy Effects

Goldman Sachs has also increased the tariff estimate for the second time in a month. Now he says that in 2025, the average tariff in the US can be 15 percent more. Apart from this, for 2025, he has reduced the estimate of American GDP growth to just one percent.

A major reason for the decline in the US stock market is also a tariff policy of President Donald Trump. President Trump says that he is going to implement the reciperook tariff to all countries of the world. Earlier it was believed that it would remain at a limited level, but now it seems that this matter can be big.

It is obvious that the experts are constantly being warned by the experts that if the reciperook tariff is imposed then the prices of the products will increase. This production will have a direct impact and production will be reduced. The result will be that inflation will increase around the world and the risk of recession will increase. Now this estimate of Goldman Sachs is a seal on the fears of the experts.

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