Ruchir Sharma Warns AI Frenzy Is “Most Hated Bubble in History” With Crash Signals Flashing

Global investor Ruchir Sharma has warned that the current artificial intelligence investment boom shows all four classic signs of a financial bubble, calling it “the most hated bubble in history.” Speaking with Fareed Zakaria on CNN, Sharma said that soaring valuations, rapid investment inflows, rising leverage, and extreme market ownership now mirror conditions that preceded the 1929 crash and the 1999 dot-com collapse. Market valuations, he noted, are historically expensive, with peaks comparable only to past downturns.

Sharma highlighted over-investment and leverage as major concerns, pointing to the pace of spending in AI infrastructure, which he said is already at levels seen at the peak of the 2000 technology boom. Even major firms like Meta have shifted from strong cash positions to borrowing heavily to fund AI development, signaling what he called the third warning sign—over-leverage. He added that investor exposure to equities has reached record highs, exceeding levels seen before the dot-com crash, marking the fourth indicator, over-ownership.

While he said predicting the exact timing of a crash is impossible, Sharma warned that bubbles often burst when the U.S. Federal Reserve tightens interest rates or investors run out of liquidity. Recent market volatility, he noted, was triggered simply by speculation that rate cuts may be delayed. If inflation rises and the Fed is forced to hike rates in 2026, the downturn could be severe, he said. Despite mounting anxiety around AI—reflected in public comfort levels with new tech falling to 31% from 72% during the dot-com era—Sharma said investors are still acting as if “the music is still playing, and we’ve got to keep dancing.”

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