Li Bei Warns of Peak AI Capital Spending and a Second Market Downturn in 2027

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Li Bei, founder of Shanghai Banxia Investment, warned in a Tencent Finance interview on September 24, 2026, that AI capital spending may peak by mid-2027. On-chain data shows Q2 ARR growth has already slowed, indicating a valuation correction rather than a "Davis double kill." She anticipates a second market downturn when profit expectations decline, likely around mid-2027. Fear and Greed Index readings suggest increasing uncertainty in the sector. Li Bei also noted that China’s consumer market could attract global capital as the AI boom wanes and the U.S. economy slows.
ME AI message, on September 24, Li Bei, founder of Shanghai Banxia Investment and a well-known Chinese hedge fund manager, warned of AI bubble risks in an exclusive interview with Tencent Finance. She noted that while overseas AI capital expenditures continue to rise, the quarter-over-quarter growth rate may peak by mid-next year. Previous upgrades by cloud providers were based on the assumption of rapid linear growth in AI model revenues; extrapolating from Q1 trends, total model revenue this year is projected to reach around 500 billion yuan, exceeding 1 trillion yuan in the following two years—matching current annual capital expenditures of over 1 trillion yuan would not constitute a bubble. However, in reality, ARR growth has already slowed significantly in Q2. Li Bei emphasized that the correction in the AI sector since July is not a "Davis double squeeze"—valuation has declined, but the market still expects substantial profit growth by 2027. Yet if ARR fails to rise, current investment levels are unsustainable, and capital expenditures are likely to peak in 2027; even if not in 2027, they will peak by 2028. Li Bei predicts that the "second wave" of declines in AI will only occur when capital expenditures truly peak and profit expectations begin to fall—potentially around mid-next year. When the AI hype fades, the U.S. economy weakens, U.S. Treasury yields decline, and the dollar depreciates, China’s consumer sector could instead become a "desert oasis" for global assets. (Source: MLion)
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