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Joachim Klement, managing director and research analyst at Panmure Liberum, said in an October 9, 2026 report that he believes the AI bubble could burst in 2027 or 2028. That is a dated forecast, not a known outcome or consensus view. Klement also acknowledged that the call could be premature and advised clients to prepare rather than sell immediately.
When does Panmure think the AI bubble could burst?
Klement’s stated window is 2027 or 2028. “My core conviction is that the AI bubble will either burst in 2027 or in 2028, so sometime in the next two years,” he said, as quoted in Bloomberg reporting republished by Insurance Journal. His conviction describes his assessment as of October 9, 2026; it does not establish when markets will turn.
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The timing is consistent with a tension in Panmure Liberum’s earlier analysis. In May 2026, the firm argued that enthusiasm and growth expectations for AI-related technology stocks appeared excessive, but cautioned that the boom might continue for another one to two years. The report said, “While we think that AI is in a bubble, we emphasise that it is probably too soon to sell tech stocks, since this phase can last another 1-2 years.” That analysis is available in Panmure Liberum’s May 2026 report.
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Together, the two views allow for further gains before a possible reversal. They are not a prediction that the market must fall on a particular date.
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What could cause a reversal?
The concern is about the financing and eventual payoff of AI infrastructure, not simply the technology’s popularity. Hyperscalers are investing heavily in data centres and related capacity. If the earnings and monetization generated by that investment fall short of expectations, large capital outlays could strain free cash flow. Higher borrowing costs could make it harder to finance continued expansion or sustain valuations built around rapid future growth.
Bloomberg Intelligence estimated that hyperscaler data-center capital spending would reach $713 billion in 2026, more than double the prior year, according to the October account. This is an estimate reported by Bloomberg, not a final spending result or a figure attributed to Panmure Liberum.
Panmure Liberum’s May report pointed to the economy’s growing dependence on technology investment as one reason for caution. It said technology investment accounted for 93% of US GDP growth over the four quarters to the end of Q1 2026. For comparison, the firm put the share at 56% at the peak of the late-1990s and early-2000s technology, media and telecom bubble, and 52% during the peak of the cloud-computing and zero-interest-rate period.
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Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →The same report said quarterly US investment in IT equipment and software reached $1.5 trillion in Q4 2025, compared with $830 billion in Q4 2000 in inflation-adjusted terms. These are Panmure Liberum’s figures and comparisons; they depend on the firm’s data and definitions. A high investment share or a large spending total does not, by itself, prove that a bubble exists or determine when one might end.
What would a burst mean for the stock market?
Panmure Liberum’s May analysis tested three slowdown or reversal scenarios and argued that a sharp pullback could become a bear market across major indices. The October account also reported Klement’s point-in-time targets: an S&P 500 level of 5,000 at year-end 2027, which he said would imply 36% downside from levels at the time, and a Stoxx 600 level of 430, more than 30% below levels then. These were forecasts made in October 2026, not current index readings or observed results.
Those projections illustrate the potential scale of the downside in Klement’s view; they do not say that either index will reach those levels. The scenarios also do not establish that all technology companies, or the broader market, would be affected equally.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How strong is the case for a bubble?
Panmure Liberum is not the only institution to warn about market risk, but warnings do not prove that a crash is inevitable. The Associated Press reported that the Bank of England said, “The risk of a sharp market correction has increased.” IMF Managing Director Kristalina Georgieva warned that market conditions could “turn abruptly.” The same AP account also described uncertainty about how much productivity generative AI will ultimately deliver, alongside views expressing confidence in longer-term growth.
Panmure Liberum’s May report was labeled non-independent research and a marketing communication. The firm noted that conflicts may affect objectivity and said investors should treat the communication as only one factor in an investment decision. That context matters when weighing its analysis alongside other views.
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What did Klement advise investors to do?
Klement’s message was to plan for risk, not to sell immediately. “What I tell people is now is the time to prepare,” he said in the October account, which also reported that he recognized his bearish call might be early. Panmure Liberum’s May warning against selling too soon makes the same timing uncertainty clear: the boom could persist even if its eventual reversal is a serious risk.
For an individual investor, these market forecasts are not personalized investment advice. They do not account for a person’s goals, time horizon, portfolio, or ability to absorb losses.
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