BCA: AI is repeating the historical bubble cycle.

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Investment research firm BCA Research has warned that the current artificial intelligence boom is repeating the trajectory of historical investment manias, all of which ultimately ended in collapse. The firm expects the AI boom to end within the next 6 to 12 months.

On Friday, the firm's chief global strategist Peter Berezin noted in a recent report that by studying periods of surging capital expenditure throughout history, it was found that "AI is following the same patterns as those ill-fated boom cycles." BCA Research analyzed the 19th-century railway expansion, the electrification wave of the 1920s, the late-1990s internet bubble, and several upswings in the oil industry.

The firm summarized five recurring patterns from these historical cases and suggests that the current AI cycle may be approaching its peak. BCA Research says it is watching for the arrival of the "metaverse moment," which will serve as the signal to shift stocks to maximum defensiveness.

Five Historical Signals Sound the AI Peak Alarm

Pattern 1: Misjudging the Pace of Technological Adoption
Investors commonly overlook the S-curve pattern of technology adoption. Investors have unrealistic linear or exponential growth expectations for AI’s scaling, while in reality, the process follows a "slow start – mid-term acceleration – late-stage deceleration" pattern.

Pattern 2: Overestimating Profit Prospects
Revenue forecasts tend to be overly optimistic, severely underestimating the intensity of price competition during commercialization. History shows that fierce price wars quickly erode profit margins, leading to actual profitability falling short of expectations.

Pattern 3: Risks Accumulating from Debt Financing
As the boom progresses, the reliance on debt financing gradually increases. When growth slows, cheap capital amplifies financial risks and exacerbates market corrections during cyclical downturns.

Pattern 4: Asset Prices Peak First
Asset prices typically peak before the decline in investment activity. This typical lag reflects the disconnect between market sentiment and fundamentals, and often signals more significant price corrections ahead.

Pattern 5: Forming a Downward Spiral
A sudden drop in capital expenditure drags down the overall economy, creating negative feedback on asset prices and forming a self-reinforcing downward cycle.

Based on these five historical analogies, BCA Research judges: The current AI boom may end within the next 6-12 months, and advises investors to shift to defensive strategies in advance to prepare for a potential market correction.

Risk Warning and DisclaimerThe market entails risks; investments should be made cautiously. This article does not constitute personal investment advice and has not taken into account the particular investment objectives, financial circumstances, or needs of any specific user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their individual circumstances. Investing based on this is at your own risk. ```