TS Lombard advises against trying to time when the AI trade collapses Fears about an artificial-intelligence bubble popping are far from fiction, according to TS Lombard strategists. In fact, they say “the crash is coming.” “The only question is what to do about it,” wrote Dario Perkins, global market strategist at TS Lombard, in a recent report to clients. In a nod to Citrini Research’s AI doomsday report that went viral at the start of the year, he laid out a multiyear fictional look at the before and after of that bubble bursting.
Perkins envisaged an investor in 2030, looking back on 2026 as the year when things started to look a bit rotten below the surface. Hyperscalers were spending and flooding the AI ecosystem with cash as chip giant Nvidia was leading circular investing, investing in its customers to get them to buy more chips. Those hyperscalers were also starting to fund build-outs with special-purpose vehicles that were off the balance sheets, and leverage started to explode.
Model developers Anthropic and OpenAI were still pretty secretive about the state of their finances, and concentration became another worry. Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it. I would like to receive updates and special offers from Dow Jones and affiliates.
I can unsubscribe at any time. That came as the public began showing a lack of interest in AI. The vibe really shifted toward the end of 2027, he continued, as OpenAI’s much-delayed initial public offering did not get the same benefit of the doubt as Anthropic’s a year earlier, as investors started to take a hard look at the numbers. **Read:**Anthropic just put out its IPO filing.
Here’s everything you need to know. Orders at chip, server, construction and power-equipment suppliers suddenly halved, and the export-led economies that had supplied them — Korea and Taiwan — were hit hard,” he wrote. By April, the S&P 500 was off 30% from its peak, AI-linked stocks were down 40% and the rest of the market down 20%, with $20 trillion of U.S. financial wealth now up in smoke.
By now, AI technology was freely available “and most regular people weren’t that fussed.” As a bear market set in, investors began grilling AI balance sheets and leverage, neoclouds filed for bankruptcy, loans on data-center projects saw write-downs, a cloud provider was cut to junk and banks were left holding debt. Hyperscalers became slower-growth assets and some lenders faced billions in losses. As for the economy, the AI bust wiped out 500,000 lost jobs in nonresidential construction owing to the bust of AI infrastructure, and Asian supply chains were it hard.
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