Negative impactEconomy
AI bubble is coming, and there is no way out! Ashwath Damodaran explains what investors should do before the crash begins
Economic Times 2 hrs ago·4 Nov 2026, 10:33 am
Valuation expert Aswath Damodaran has warned that the current surge in Artificial Intelligence is forming a classic market bubble. He argues that while the technology is transformative, the rapid price appreciation driven by hype and easy access to data has pushed valuations far beyond their fundamentals. According to Damodaran, this disconnect creates a significant risk for investors who are chasing the trend without understanding the underlying value.
For retail investors, this situation highlights the danger of buying into a frenzy without proper due diligence. The key takeaway is to look past the hype and assess the actual earnings potential of companies in the sector. Investors should be cautious about overpaying for growth and instead focus on companies with sustainable business models.
Moving forward, the market will likely face volatility as the excitement cools. Investors should watch for signs that valuations are correcting or that earnings reports fail to meet sky-high expectations. It is crucial to remain disciplined and avoid panic selling during the inevitable correction phase.
Excerpt from Economic Times
Valuation expert Aswath Damodaran believes an AI bubble is inevitable and investors cannot avoid its impact entirely. In a recent podcast, he traced the AI frenzy to ChatGPT's 2022 launch, which brought artificial intelligence into public consciousness. He explained how advances in computing power and access to vast…Read the original at Economic Times
Key takeaways
- Category: Economy.
- AI reads the tone as negative (potentially bearish) for the stock.
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A meaningful update worth tracking. The tone is negative — watch for downside reaction. Use the price and stock snapshot to gauge how the market is responding.
