Remember 1999? When everyone and their cousin’s dog was buying tech stocks because the internet existed? Well, buckle up—BCA Research thinks we’re about to get a sequel, and this time it’s powered by artificial intelligence.
Here’s the plot twist: instead of the market crashing *now*, these strategists think we’re about to see a 1999-style “melt-up”—basically a euphemism for “stocks go absolutely bonkers before reality checks in.” We’re talking a potential 30% rally that could push the S&P 500 past 9,200. That’s the kind of move that makes financial advisors nervous and retail traders giddy.
The reason? The AI trade is apparently hitting its late-stage growth phase, which in market speak means “things are about to get weird.” BCA identified four signs that suggest the AI capex boom is maturing—and not in the “fine wine” way.
First, everyone’s suddenly buying AI subscriptions. The Ramp AI Index, which tracks how many US businesses are paying for AI tools, just hit 50% for the first time ever in March. That’s adoption on steroids. When half of American businesses are already on the AI train, you know the early-adopter advantage is basically gone.
Second, GPU prices are still sky-high. Nvidia’s B200 cloud GPU was averaging $5.09 per hour in March—up 13% from the month before. These chips are the pickaxes in the AI gold rush, and they’re not getting cheaper. That’s either a sign of insatiable demand or a sign that people are about to realize they overpaid for a lot of computing power they don’t actually need.
Third, tech giants are throwing absurd amounts of money at AI infrastructure. Amazon, Google, Meta, and Microsoft are collectively estimated to spend $587 billion on capital expenditures this year. That’s not “investing in the future”—that’s “we’re terrified of missing out and we have unlimited cash.” The risk, as BCA notes, is that we end up with an AI-powered economy that doesn’t actually require trillions in data center investments. Oops.
Fourth—and this is the scary part—financial risk is rising. Credit spreads for tech debt are widening, which means investors are quietly pricing in more risk. Meanwhile, big tech firms are buying back shares and paying dividends instead of reinvesting profits. Translation: they might be getting nervous too.
So what does this mean for your portfolio? BCA thinks a 1999-style melt-up is “increasingly likely,” but they’re also hedging their bets by noting it’s “too soon to tell if the AI bubble could burst in the next year.” In other words: the party might be just getting started, or we’re already at the moment right before everyone realizes they’ve been dancing on a landmine.
The real kicker? The biggest risk isn’t that AI will be a dud. It’s that AI will actually work—just not in the way that justifies $587 billion in annual spending. Welcome to late-stage capitalism, where the real money is made by those who know when to leave the party.
