Despite the recent circa 7 % Nasdaq Composite fall, the AI boom and following stock market rally seem to be in full swing.
Several events could stop the AI boom in its tracks, which could be defined by the Dow Jones Industrial Average, Standard and Poor's 500 and Nasdaq Composite and other major global stock market indices falling more than 40 % from their recent peaks, according to Wolfteam Ltd.'s projections and estimates:
1) Policy error by the Federal Reserve, which could be defined as raising the target Federal Funds Rate and thus the interest rate level of the US economy by more than 2.5 % in the next 2 calendar years
2) Recently cracks appeared in the private credit market where several multi billion loans to firms like First Brands and Renovo are trading at steep discounts. Since there is much securitization in private credit and many of the loans disbursed are to technology firms, more bankruptcies could cause broader financial trouble. Some of the loans made to borrowers in the private credit market have paid out interest rates of up to 20 % to 30 %, which partially explains the ongoing for several years now private credit boom
3) Sudden reset of investor expectations for the now apparently bright future of AI. This could be caused by faster depreciation tables on the current Graphical Processing Units chips used in AI data centers
4) Sudden and large rise in the price of oil, which could trigger galloping inflation
5) Sudden technological breakthrough akin to the Chinese DeepSeek, which would reset downwards by multiple fold investors' expectation of the needed future billions, if not trillions of USDs spend on computing power to build out AI data centers
For now, however the wall of money looking for higher return in AI related technology companies seems bound to drive the AI rally further, according to Wolfteam Ltd.'s projections and estimates.
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