Legendary investor: This time is no different, the US stock market bubble is about to burst!

Veteran investor Jeremy Grantham stated that the endless hype around artificial intelligence among U.S. stock investors is a typical process of creating a bubble, and this bubble is currently developing along the paths of other historical bubbles.

Grantham foresees a difficult road ahead for the U.S. stock market as the aforementioned bubble continues to grow larger. Once the bubble in AI stocks bursts, losses will accumulate, as artificial intelligence is no different from other temporary technological frenzies that have inflated market valuations.

Grantham said, “The grander the new ideas, the greater the new inventions, the easier it is for the market to become overvalued, attracting more speculative funds, this is not a coincidence.”

Grantham compared the enthusiasm for artificial intelligence to the internet era, when the internet began to gain popularity, and the 1920s, when railroads and electrification were changing everything. Grantham stated that in the past, these technological frenzies led to “spectacular bubbles,” and artificial intelligence is no exception.

Grantham said, “During the internet phase, from 1998 to 1999, truly great things happened, but they went overboard. These great inventions caused the market to excessively inflate in the short term and then collapse in the medium term. Then investors emerged from the ruins, and new technologies changed the world in the long term. This is what I expect will happen this time.”

Other market commentators have warned investors about artificial intelligence, pointing out that the valuations in the tech sector are high, and the massive expenditures by companies are almost unclear when they might yield returns.

One of Wall Street's most bearish economists, David Rosenberg, stated that the market is in a “super bubble” and is about to face a “spectacular” correction, as indicators such as price-to-earnings ratios being at historical highs and high household equity ownership ratios support this view.

Another super-bearish forecaster, John Hussman, said that based on his company's most reliable internal valuation indicators, the U.S. stock market appears to be at its most overvalued level since 1929.

Grantham has also repeatedly warned that U.S. stocks could decline significantly in the coming years. In 2022, he cautioned investors about the formation of a multi-asset “super bubble” in U.S. stocks and predicted that the S&P 500 index could drop 43% from its then-current level. The benchmark index fell about 25% in 2022 but completely erased that loss in 2023 and has risen 20% this year