The AI bubble is about to burst — and a big market correction is coming

# The AI bubble is about to burst — and a big market correction is coming Source: [https://nypost.com/2026/10/17/business/the-ai-bubble-is-about-to-burst-much-like-the-infamous-dot-com-crash/](https://nypost.com/2026/10/17/business/the-ai-bubble-is-about-to-burst-much-like-the-infamous-dot-com-crash/) See more of our coverage in your search results\. Financial data displays price trends and stock market trading activity on a trading screen in real time\.fotofabrika \- stock\.adobe\.com On Jan\. 1, 2000, the world got a reprieve from a much\-hyped technological Armageddon when it turned out[the Y2K crisis](https://nypost.com/2026/09/19/business/ai-fears-mirror-y2k-hysteria-but-dont-dismiss-concerns/)wasn’t a crisis after all\. Still, a real threat was looming if anyone paid attention to the stock market\. A new and life\-changing business known as the internet, you will recall, was going to make us all rich, and not just the oligarchs behind the technology\. Dot\-com stocks — even those of companies that weren’t making money, and that means most of them — were also supposed to defy common sense and gravity\. We were in a “new paradigm” — the code word for the era’s irrational exuberance in which emotion rather than metrics pushed stock valuations\. At the time, few people heeded warnings that not every business with that “new economy” suffix was destined for greatness\. It didn’t matter to masses of new investors who flooded the markets armed with the opinions of financial TV touts and newly invented discount brokerages as they kept buying with clicks on a computer screen\. People with no real knowledge of Wall Street suddenly rivaled Warren Buffett for their acumen picking these no\-lose stocks\. It was all the rage in financial media at the time, overwhelming the occasional Cassandras who just didn’t get it\. ## There’s a glitch That is, until reality set in\. In March of that year, the historic stock run\-up was exposed as one of history’s great investment bubbles\. Many of the business models of the companies in the middle of the frenzy and the subsequent collapse were outright insane; most just overvalued by the market\. A precious few held real and tangible promise, but they too needed to survive the correction\. The losses were staggering\. A generation of investors were burned\. The tech market took years to recover from the fallout\. History, I’m afraid to say, does repeat itself when it comes to market manias\. That’s why our current mania[involving all things AI](https://nypost.com/2026/10/16/business/ai-stock-sell-off-ramps-up-over-debt-fueled-data-center-spending-fears/)will almost certainly follow the same trajectory with investor losses to follow\. Exactly what prompted the internet mood shift back in the day — and what will spark the coming artificial intelligence 180 — is hard to pinpoint\. ### Charlie Gasparino has his finger on the pulse of where business, politics and finance meet Sign up to receive On The Money by Charlie Gasparino in your inbox every Thursday\. ### Thanks for signing up\! The most likely culprit: the collective instincts of the smart money of hedge funds and institutions that do their own research and filter out TV touts as opposed to the faux Buffetts who don’t\. As they did back during the dot\-com mania, these investors are now sensing that something isn’t quite right with AI, the data and the Wall Street sales machine\. Then as now, big investors began to take profits and then more\. When[the market crashed](https://nypost.com/2026/07/07/business/your-401k-could-be-at-risk-if-the-ai-bubble-bursts-treasury-report/)back in 2000 it was not just speculative stuff like promises of a Pets\.com becoming the next Microsoft\. The aforementioned tech giant got swept up in the mood shift as well, as did just about any public company that was tied to this revolutionary business\. Scary stuff for small investors who dived into the market and never looked back until they lost everything — and many did\. What’s even scarier is that most investors either don’t remember those crazy days or are blissfully ignorant of the past as they weigh what’s up with AI and want to be part of the hype\. ## Don’t get greedy The AI hype is so similar to the dot\-com hype it’s almost breathtaking\. The sales pitch is nearly the same: groundbreaking stuff \(which is true\) that all investors, not just the oligarchs, will get rich from \(which really isn’t\)\. It may be true someday, though if history is any guide, that day is far off and getting there will be messy\. I can’t tell you whether last week’s market ructions — spiking rates after a bad inflation report then a selloff in AI stocks — is the herd making its final statement on AI by rearing its ugly head as it did back in 2000\. There might be more froth to come; IPOs by hyperscalers like Anthropic and possibly OpenAI could hit in the coming weeks and months\. But common sense and history teaches us it won’t last\. Interest rates will increase because AI is in competition with the massive borrowing needs of the federal government\. The correction is coming to AI and all the companies tapping into its technology through big spending, much of it using debt, the main ingredient of any crash\. If history is any guide, it’s time to take your profits and not get greedy — or pray that whichever AI you’re betting on will be a survivor of the crash that’s coming\.