Panmure Liberum strategist Joachim Klement warned investors that the AI trading boom could end soon and may trigger the sharpest market crash since the global financial crisis. According to Sina Finance, he said his base case is that the AI rally will break down as early as 2027, dragging stocks lower.

Klement said his core view is that the AI bubble will burst in 2027 or 2028, within the next two years. He said large cloud providers have largely exhausted free cash flow, while debt costs are rising quickly and expensive financing will weigh on those companies.

He set a year-end 2027 target of 5,000 for the S&P 500, implying a 36% drop from current levels. Among seven other strategists tracked by Bloomberg, that is the most bearish forecast so far; the others on average still see 14% upside for the broader market.

Klement also expects the Stoxx 600 to fall to 430, more than 30% below current levels. He said his warning is aimed at risks he believes may emerge in six to nine months, and he is advising investors to prepare contingency plans and timing tools rather than sell immediately.