Artificial intelligence is exhibiting the same telltale signs seen in earlier investment bubbles that eventually collapsed, according to a new analysis from BCA Research, which cautions that the current surge could begin to fade within the next year.
In a report authored by Peter Berezin, BCA’s chief global strategist, the firm argues that its review of historic capital-expenditure booms shows “AI is following the same script as those ill-fated booms.”
The research compares today’s AI frenzy to 19th-century rail expansions, the electrification rush of the 1920s, the late-1990s dot-com bubble, and multiple cycles in the oil industry.
BCA identified five repeating patterns that echo across these earlier eras.
“Lesson #1: Investors failed to appreciate the S-shaped nature of technological adoption.”
This tendency, the report said, has often led to overly ambitious assumptions about how quickly new technologies can scale.
The second theme centers on unrealistic expectations for revenue.
“Lesson #2: Revenue forecasts underestimated the degree to which prices would fall.”
This recurring error has historically undermined profitability once competition rises and prices normalize.
Financing behavior provided another red flag.
“Lesson #3: Debt became an increasingly important source of financing.”
Periods of easy money, BCA noted, typically magnify systemic risk once growth slows.
A fourth common pattern involves timing.
“Lesson #4: Asset prices peaked before investment declined,” a sequence BCA says is typical of speculative bubbles.
The final lesson highlights the broader economic consequences:
“Lesson #5: The capex busts weighed on the economy, which, in turn, further hurt asset prices.”
Given these parallels, BCA Research believes the current AI surge may be approaching its limit.
“We expect the AI boom to end within the next 6 to 12 months,” the report states.
Analysts at the firm say they are watching for a “Metaverse Moment”—a clear signal indicating when investors should “turn maximally defensive on stocks.”