Major Stock Market Crash

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Major Stock Market Crash

Are We Heading Towards A Major Stock Market Crash?

The talk about a potential stock market crash is now spreading as the markets are sitting near an all-time high. The S&P 500, FTSE 100, and even the Nasdaq Composite are sitting at record levels.

major uncertainty for the markets is AI. Sure, it is the AI which has propelled the markets towards new highs as everyone wants to get a piece of AI stocks. But, AI can be the very thing which would send the markets lower!

Ai Infrastructure To Attract Investments

quick look at the tech stocks shows that they are trading at high levels due to massive investments in AI infrastructure. On top of that, many businesses have improved their operations with the help of AI.

So, when the capital expenditure slows down, and it will, that's when the stock markets could crash. After all, the ongoing spending on AI isn't going to last forever, and that's the biggest concern right now.

According to the CEO of Amazon, the demand for core infrastructure and AI continues to remain strong. They also added how they are working on improving the capacity.

Another factor to consider is that market crashes usually happen after a shock. This can be the Trump tariffs or the global pandemic.

But the bottom line is that the current valuations are way overstretched. So, even a little bit of shock will be enough to send us into the dot-com bubble 2.0.

Only, this time it would be called the AI bubble, and it will lead to a sea of red in the markets. At the same time, there's a chance that AI might prove to be as useful as everyone's saying it will be. In that case, we might see a continuation of the bull run.

With all things considered, it is wise to not buy the stocks while they are trading near the ATH. While it may be tempting and you may feel FOMO, the safe approach is to wait for more reasonable levels.

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