US Stocks ‘Deeply in AI Bubble Territory’, Warns Port Shelter’s Richard Harris as Markets Hit Record Highs
New York, October 28, 2025: The US stock market’s relentless rally to record highs has sparked concerns among investment strategists, with Richard Harris, Executive Director at Port Shelter Investment Management, warning that Wall Street is now “deeply into” artificial intelligence (AI) bubble territory.
Speaking to CNBC TV18, Harris highlighted classic warning signs of a market mania — soaring valuations, rising leverage, reduced regulation, and a compelling narrative driving speculative frenzy. His cautionary remarks come as all three major US indices — the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average — notched record closing highs on Monday, powered by a surge in technology and semiconductor stocks.
AI Mania Drives Record Market Rally
The AI boom has been the dominant force behind Wall Street’s rally in 2025, with investors pouring billions into companies developing or supplying AI technologies. On Monday, the Dow Jones Industrial Average climbed 0.7%, the S&P 500 advanced 1.2%, and the Nasdaq Composite surged 1.9% to a new peak of 23,637.46.
Tech heavyweights such as Nvidia, AMD, Intel, and Qualcomm led the rally. Qualcomm’s stock soared over 11% after the company unveiled two new AI chips for data centres, while Nvidia — the undisputed leader in the AI chip market — has jumped nearly 43% so far this year.
Other semiconductor giants have also benefited, with AMD and Intel shares doubling in value since January. Among the “Magnificent Seven” tech giants, Microsoft has gained 26%, Alphabet (Google’s parent company) is up 42%, and both have been key drivers of the Nasdaq Composite’s 22.4% year-to-date gain and the S&P 500’s 16.9% rise.
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Classic Warning Signs of a Bubble
Harris likened the current AI-driven market euphoria to past speculative episodes such as the dot-com bubble (2000) and the housing market crash (2008).
“If you look at the greats who’ve studied market crashes, they often cite similar red flags — high valuations, excessive debt, deregulation, and a ‘big story’ that captivates investors,” Harris explained.
“In 2000, it was the internet. In 2008, it was housing. Today, it’s AI — with companies effectively lending to each other through the supply chain. Nvidia lends to OpenAI so OpenAI can buy Nvidia chips — and that money cycles back into the market, inflating valuations.”
This circular capital flow, he added, mirrors the self-reinforcing optimism that often characterizes late-stage bubbles.
‘Bull Markets Die Hard,’ Says Harris
Despite his cautionary tone, Harris acknowledged that bull markets rarely end abruptly. He noted that while the current rally may appear unsustainable, momentum-driven gains could persist for months — or even years — before any meaningful correction occurs.
“Bull markets die hard. It could be quite a while before we see this really come to a head,” Harris remarked. “The eventual trigger may not be obvious — it could be an unknown event that catches investors off guard.”
Such “unknown unknowns,” he said, have historically been catalysts for market reversals, similar to how the collapse of Lehman Brothers in 2008 or the sudden tech selloff in 2000 caught many by surprise.
Global Optimism Adds Fuel to the Fire
The US rally also coincided with renewed optimism over a potential US-China trade deal, boosting sentiment across global markets. European and Asian equities mirrored Wall Street’s strength, with risk appetite improving after months of uncertainty.
However, analysts warn that the combination of speculative euphoria and geopolitical optimism can be dangerous, as investors often ignore warning signs during euphoric phases.
Gold and Cash Regain Appeal as Safe Havens
As markets soar to record highs, some investors are quietly hedging their portfolios against potential turbulence. Harris said gold and cash are likely to become more attractive as safe-haven assets in the months ahead.
“We are heading into that sort of territory where investors start preparing for a reversal,” he cautioned. “It could be two years out, but the buildup is visible. In such an environment, people will accumulate gold and cash out of fear that something significant may happen down the line.”
Gold prices have already shown signs of firming, reflecting rising demand from institutional investors seeking protection against potential market corrections and inflationary pressures from the AI boom.
Analysts Split Over ‘AI Bubble’ Fears
While Harris’s comments underscore growing concern about an overheated market, not all experts agree with his “bubble” characterization. Some analysts argue that the AI revolution represents a genuine structural shift, comparable to the internet’s emergence two decades ago.
They point out that corporate earnings, AI adoption, and productivity gains could justify current valuations, at least in part. “AI is transforming every sector — from manufacturing to finance — and valuations, though rich, reflect strong long-term growth potential,” said one Wall Street strategist.
Nevertheless, even bullish investors admit that short-term volatility is inevitable as expectations run high and valuations stretch beyond historical averages.
Outlook: Opportunity or Overheating?
The debate over whether Wall Street is in a “bubble or boom” is likely to intensify as the AI narrative continues to dominate global markets. With record-breaking valuations, rising speculative flows, and investor complacency, the stage appears set for heightened volatility ahead.
Market participants are watching upcoming US Federal Reserve policy decisions, corporate earnings reports, and AI sector developments for clues on whether the rally still has legs — or if it is, as Harris warns, “the calm before the storm.”
