AI technology stocks are in a bubble. AI stocks are overvalued by 54 % on average, in Wolfteam Ltd.'s view. The Nasdaq Composite could correct by more than 60 % in the next three years.
Wall Street investment banks' equity research analysts present too rosy, optimistic forecasts for AI stocks' future revenues and profits partly influenced by the recent upwards movement of AI stocks prices, according to Wolfteam Ltd. It is true that success usually begets success, but sometimes expectations can fall off a cliff.
Wall Street investment banks' economists present too optimistic forecasts of the US and global economy by recent economic performance and apparently trusting too much the ability of the Federal Reserve to handle any economic dislocations.
In Wolfteam Ltd.'s view the next financial crisis will be triggered by the negative wealth effect of AI stocks falling more than 50 %, which will cause an economic recession or macroeconomic dislocations, which will spread via the loan and general economy channel to the banking sector. And again major Wall Street banks could face difficulties.
However, the Federal Reserve has shrewdly raised rates, so the Federal Reserve has room to lower interest rates levels in the face of an economic crisis.
No comments:
Post a Comment