The current artificial intelligence, AI technology boom will lead to a bust, akin to the dot-com boom and bust in 2000 in 3 years, according to Wolfteam Ltd.'s projections and estimates.
The Nasdaq Composite could correct 80 % from its peak within 5 years, in Wolfteam Ltd.'s view. The Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla AI technology stocks' market capitalization imply too high growth rates for revenue and profits.
At Apple's Price/Sales ratio Apple's revenue must grow by 20 % 5 years in a row to substantiate Apple's current market capitalization of 2.66 trillion USD.
Microsoft's Price/Sales ratio of circa 15 presupposes even more stunning growth of 25 % for 7 straight years to substantiate Microsoft's current market capitalization of 3.09 trillion USD.
Wall Street equity research analysts driven by the recent Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla price action keep coming with overoptimistic, unrealistic estimates for the Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla's future revenue and profits, even though the US and the World's economy is practically stagnating with growth rates in the statistical margin of error.
These overoptimistic forecasts of revenue and profit of Wall Street equity research analysts are most probably forced partially be influence from the investment banking, mergers and acquisitions, IPO, stocks sales and debt sales underwriting departments. Much what Eliot Spitzer fought against.
Investment banking, especially mergers and acquisitions and IPO underwriting is a very lucrative sales business, while the analysis or equity research and risk management divisions of investment banks are pushed aside as 'second fiddle' so investment banks can drum up sales and trading, investment banking business and lending business for corporate banks, according to many articles, rumors and Wolfteam Ltd.'s view, also from the personal banking experience of the Wolfteam Ltd.'s founder.
This brings too optimistic forecasts for he Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla and generally technology stocks' future revenue and profits. And on their side asset managers and hedge fund managers do not want to pay for equity research and they use the overly optimistic equity and fixed income research of Wall Street investment banks and thus their stocks and fixed income portfolio choices are practically influence by too rosy revenue and profit forecasts and the AI technology stocks bubble keeps blowing.
If the Nasdaq composite does correct by more than 80 % this will cause a global recession of 5 % in one year and 3 % recession in the next, in Wolfteam Ltd.'s view. For a change global central banks could decide not to intervene and the market could clear from inflation generating zombie companies.
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