Wall Street is sounding the alarm on the artificial intelligence trade, fearing it may be overheating. Record gains in AI-linked stocks and corporate spending have sparked concerns of a potential bubble. JPMorgan CEO Jamie Dimon cautioned about elevated asset prices and stretched valuations. Investor exuberance is at extremes, with AI equity bubble now a top global tail risk. Bank of America’s Global Fund Manager Survey showed cash levels falling to 3.8%, near a sell threshold of 3.7%. State Street’s Risk Appetite Index indicates large professional investors are bullish on riskier assets. Companies like Google and AMD are investing billions into AI projects. OpenAI has signed deals with Broadcom, AMD, and Nvidia to diversify its supply chain. Michael O’Rourke of JonesTrading believes the AI market is overheated, citing tech megadeals and lack of profitability. Some analysts argue that the AI trade, while stretched, still has fundamental backing and is not in a bubble. Global market analyst Lale Akoner believes investors are pricing the AI story over execution, leading to optimism but not universal euphoria. Tech firms like Nvidia, Microsoft, and Alphabet are expected to see double-digit earnings and revenue growth through 2026, outpacing the broader S&P 500. Despite high expectations, Wall Street remains optimistic about Big Tech’s performance. Analysts emphasize the need for these companies to meet high bars on both top and bottom lines for continued success.

Read more at Yahoo Finance: Wall Street sounds the alarm on AI-driven boom as investors go all in