Market volatility and AI bubble concerns intensify as the S&P 500 faces a potential 30% decline

ME News reports that on September 15 (UTC+8), warnings of “madness” and an “irrational season” have emerged on Wall Street, as concerns grow over a potential AI bubble burst. Capital Economics believes that multiple market indicators are now approaching historical bubble peaks and forecasts that the S&P 500 may begin to decline next year, ultimately falling at least 30% from its peak. Recent sharp market divergences have intensified these concerns: On July 30, Microsoft’s market capitalization surged by $450 billion in a single day, followed the next day by Apple’s $360 billion loss and Amazon’s $388 billion gain. Data from Acadian Asset Management shows that the dispersion in U.S. stock volatility has reached its third-highest level in nearly 2,850 trading days, surpassed only by the vaccine-driven rally in 2020 and the DeepSeek shock in 2025. Meanwhile, the Federal Reserve may raise interest rates by 25 basis points this Wednesday for the first time since July 2023. UBS expects the Fed to approve the hike by a 10-to-2 vote, with two officials potentially opposing. If the Fed further tightens policy, Capital Economics argues this would make the current AI-driven rally more analogous to the internet bubble of 2000. It notes that capital expenditures by hyperscale cloud companies continue to surge, with free cash flow for the four major cloud providers projected to turn negative by 2027, further accumulating risks of an AI bubble. (Source: BlockBeats)