Is the AI bubble about to burst? Wall Street short sellers warn that the US stock market faces a crash risk in the second half of 2026

Question

【BlockBeats】Recently, market research institutions issued a striking warning — the wave of artificial intelligence may be coming to an end.

According to analysis, investment in the US technology and software sectors has already reached 4.4% of the GDP, which is quite alarming as it approaches the levels seen during the internet bubble era. Even more concerning is that the annual depreciation rate of AI assets is usually around 20%, meaning tech giants face depreciation costs of $400 billion each year. Guess what? This cost is almost comparable to their entire annual profits.

In terms of valuation, the fragility of the stock market should not be underestimated. By early 2026, the expected P/E ratio of the S&P 500 is projected to rise to 22.6, far exceeding the historical median of 18. Such high valuations, combined with the potential collapse of the AI narrative, could put significant pressure on the stock market. Some forecasts suggest that in the second half of 2026, various sectors of the US stock market will experience widespread adjustments.

But it’s not all bad news. Once US stocks come under increased pressure, the Federal Reserve is likely to accelerate its rate-cutting pace to stabilize the market. According to expectations, by the end of 2026, the federal funds rate could drop to 2.25%, and the 10-year US Treasury yield may fall to 3.1%. For the crypto market, a loose monetary policy often means more liquidity flowing into risk assets, which could, in turn, support the performance of digital assets.

TooScaredToSell · Accepted Answer

400 billion in depreciation costs? That number makes my head hurt. It feels like the bubble is about to burst.

CascadingDipBuyer · Answer

$400 billion depreciation cost... As soon as I saw this number, I knew it was time to start buying the dip. Anyway, money has to be spent.

WhaleMinion · Answer

Here they go again, bearish... The 400 billion depreciation cost is indeed unsustainable, but it won't explode until 2026? I bet it's already starting to crack now.

fomo_fighter · Answer

Hmm... $400 billion depreciation cost, this number is indeed a bit scary. It feels like the tech stocks are about to cool off.

But speaking of which, a crash in the second half of 2026? Why do I feel like every day someone is calling for a bear market?

The AI bubble is real, but Wall Street folks also don’t expect to crash the coins I hold.

The depreciation cost is indeed a hidden risk; no wonder a bunch of big institutions are starting to cut holdings.

Wait, PE ratio rising to 22.6 times? That's outrageous. Isn't this just like the internet bubble on the eve of its burst?

I just want to know, are the shorts themselves also bottom-fishing?

AI isn’t going to die that quickly, but this round definitely needs an adjustment.