The US equity market may be on the verge of an artificial intelligence (AI)-driven bubble, according to Richard Harris, executive director at Port Shelter Investment Management. Despite the record highs reached by the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average on Monday, Harris warns that the current market conditions reflect classic warning signs of a bubble, akin to previous market manias. His analysis points to factors such as high valuations, excessive debt, and a prevailing narrative—similar to past bubbles like the dotcom era and the 2008 housing crisis. “Now we've got the AI story,” he said, highlighting how companies are lending to each other, which ultimately inflates stock market valuations.

On the same day that Harris issued his caution, Wall Street celebrated significant gains, driven primarily by technology stocks. The Dow increased by 0.7 percent, the S&P climbed 1.2 percent, and the Nasdaq surged 1.9 percent, reaching a record 23,637.46. Key players like Nvidia, AMD, and Intel saw substantial stock price increases, with Nvidia's shares rising by 42.6 percent this year alone. Qualcomm also experienced a notable jump, exceeding 11 percent following the launch of new AI chips. The rally has been supported by optimism regarding a potential US-China trade deal, further fueling investor confidence in tech stocks.

Despite the ongoing bullish trend, Harris cautions that a market correction is inevitable, though it may take time to materialize. He suggests that the eventual downturn could be triggered by an unpredictable event, which he refers to as an “unknown unknown.” In preparation for potential market turmoil, he advises investors to consider accumulating gold and cash as hedges against future instability. “It could be two years out, but we are heading for some sort of reversal,” he stated, underscoring the importance of being cautious in this volatile environment.