Capital Economics Sees S&P 500 Falling 21% by 2027 as AI Stock Boom Nears End

3 articles · Updated · CNBC · Sep 10

6,500 is Capital Economics' end-2027 target for the S&P 500, after a projected rise from about 7,650 now to 8,250 by end-2026.
Eight bubble gauges drove the call, with earnings expectations the clearest warning sign: S&P 500 profit-growth forecasts are near dot-com peak levels and long-term EPS expectations have hit a record high.
Tech concentration amplifies the risk, the firm said, because expected earnings growth is heavily clustered in a few large companies that could drag the index lower if results weaken.
Other late-cycle signals are also flashing: index concentration is near dot-com-era extremes, net equity issuance has turned positive, and foreign ownership of U.S. stocks is at a record high.
Volatility and leverage look less extreme for now, but Capital said another wave of IPOs and share sales could mark the final stage of the AI-driven rally, which it says may be months from peaking.