The AI boom pushes the stock market to new highs, Goldman Sachs CEO: the market is about to see a correction.

Amid the investment frenzy sparked by artificial intelligence, global stock markets have repeatedly hit new highs, but Goldman Sachs CEO David Solomon warns that this madness may soon come to an end. He predicts that a significant pullback may occur in the market within the next one to two years.

Technological innovation drives a capital frenzy, which may also be accompanied by investment misallocation.

Solomon pointed out at the Italian Tech Week event held in Turin, Italy, that whenever disruptive new technologies emerge, there is always a surge of capital influx, creating many new companies, but it often leads to the market prematurely reflecting future potential, resulting in a high-risk bubble phenomenon.

"The market always goes in cycles. Whenever new technologies bring rapid growth and capital flows in large amounts, the market tends to get ahead of the fundamentals, and there will definitely be winners and losers in this process," Solomon stated.

He cited the internet boom at the end of the 1990s to the early 2000s, which gave rise to giants like Amazon and Google, while also causing many investors to suffer heavy losses in the "dot-com bubble" burst. He anticipates that the risks and potential brought by AI may replay a similar history.

The AI investment frenzy is heating up, with market enthusiasm reaching a boiling point.

In recent years, the AI boom has swept the global market. From the rapid rise of ChatGPT developer OpenAI to the soaring stock prices of tech giants like Microsoft, Alphabet (the parent company of Google), Nvidia, and Palantir, investors have been pouring funds into AI-related assets.

This wave of AI hype has even caused major indices on Wall Street to hit new highs, despite the market experiencing turbulence due to the trade policies of the Trump administration, overall capital momentum remains strong.

However, as Solomon said: "When investors are excited, they usually only see the potential for success and overlook the potential risks. Eventually, a moment of market reset and adjustment will inevitably come." He added that he is currently reluctant to use the term "bubble," but investors are taking on increasingly large risks, a situation that is difficult to sustain for long.

Tech giants and investors jointly warn: Is a bubble forming?

Solomon is not the only executive feeling uneasy about the current market situation. At the same event, Amazon founder Jeff Bezos also stated that AI is currently in an "industry bubble."

Another veteran in the investment community, Leon Cooperman, founder of Omega Advisors, stated earlier this week on CNBC that we are in the "endgame" of a bull market, and a bubble is forming. His view echoes Warren Buffett's past warnings.

In addition, Karim Moussalem, the head of stock investments at the London hedge fund Selwood Asset Management, stated that AI trading is evolving into "one of the craziest speculative frenzies in market history," harboring significant risks. He posted on LinkedIn that this frenzy could collapse at any moment.

Optimistic about the future of AI, Solomon: I still sleep very well.

Despite the anticipated market correction, Solomon remains optimistic about the long-term prospects of AI. He emphasized that the transformative potential brought by AI technology cannot be ignored, especially when businesses begin to adopt it on a large scale, which will unleash immense value. "I sleep well every night and don't worry about what will happen in the future," Solomon said. "What excites me is that this technology is spreading, and many startups are emerging like mushrooms after rain, it's an exhilarating time."

This article discusses how the AI boom has driven the stock market to new highs, with Goldman Sachs CEO stating that the market is about to face a correction. It first appeared on ChainNews ABMedia.