Joachim Klement, head of market strategy at Panmure Liberum, warns the AI-fueled stock rally may end in 2027 or 2028, triggering the worst S&P 500 crash since the 2008 financial crisis. He predicts the index could fall to 5,000 points — a 36% drop from current levels — as hyperscalers’ free cash flows deplete and borrowing costs surge. His bearish outlook contrasts with other strategists who expect 14% average upside.
Klement also forecasts Europe’s Stoxx 600 falling to 430 points, over 30% below current levels. His shift from a previously bullish stance reflects concern that rising inflation and interest rates could derail AI infrastructure spending, which reached $713 billion in 2026. While acknowledging his call may be premature, he urges investors to prepare contingency plans, recommending a shift to defensive sectors like food, tobacco, and pharmaceuticals once the S&P 500 falls below its 200-day moving average.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing