Dhaval Joshi Warns of Rolling AI Market Bubbles

Strategist Dhaval Joshi argues that the artificial intelligence market is not a single bubble but a rolling sequence of bubbles. He describes a pattern where investors rapidly inflate and then deflate valuations across different sectors, such as semiconductors, silver, and software-as-a-service, while attempting to locate where AI value will be captured.

Joshi characterizes the current environment as a profit margin bubble rather than an earnings bubble, questioning whether high margins can be maintained. He predicts that AI capital expenditure will likely peak between late 2026 and the first half of 2027. While industry leaders including Jamie Dimon, Sam Altman, and Jeff Bezos have acknowledged bubbly conditions, Joshi suggests that these cyclical, sector-specific pops have prevented a total market crash.

Despite this resilience, Joshi warns that certain triggers could cause investors to exit risky assets entirely. These risks include a significant recession, a sudden unwind of the capital expenditure cycle, or a sharp rise in real interest rates.