AI Bubble Poses Paramount Risk for Next Year

(MENAFN) The bursting of the artificial intelligence bubble and plummeting technology sector valuations represent the most severe threat facing markets in 2026, according to fresh Deutsche Bank research findings.

A commanding 57% of 440 survey participants identified the AI boom's potential collapse as the paramount danger, with anxiety over inflated AI and tech company values eclipsing all competing market stability threats for 2026.

Approximately 27% of those surveyed warned that the incoming Fed chair might pursue overly aggressive interest rate reductions, potentially triggering widespread financial instability. Meanwhile, 22% anticipate a full-scale capital markets breakdown within the coming year.

Additional widely anticipated hazards include surging bond yields, climbing interest rates, and AI's expanding disruption of employment sectors.

Powell's Future Creates Uncertainty
Regarding Fed Chair Jerome Powell's future role, 41% of respondents project he could continue serving as a Federal Reserve governor with retained voting authority following his chairmanship's May expiration. However, substantial ambiguity persists surrounding this prospect.

The question of Powell's position carries significant weight for 2025, particularly since the overwhelming majority of former Fed chairs have historically departed the institution immediately upon completing their leadership terms.

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