Economist Warns of AI Bubble, Stock Markets Fall in 2025

Veteran investor David Roche has warned of a stock market crash in 2025 due to lower-than-expected interest rate cuts, a slowing US economy and the AI ​​bubble.

The strategist, Quantum, told CNBC that he believes a [bear market] is likely coming, but probably in 2025.

Roche expects the Federal Reserve to resist cutting interest rates to the market-desired 3.50%.

The Fed’s median forecast is 4.1% through 2025, while almost all market participants currently see rates below 4.1% by September 2025, according to analysis by US trading firm CME.

Roche believes earnings will fall short of expectations, due to a slowing economy, which is another factor causing a bear market. The third factor that Roche expects to lead to a bear market is the artificial intelligence sector. He warned that this sector “has decisively entered the bubble zone,” and will emerge from it within the next six months or so, and will be one of the drivers of slowing economic growth.