Artificial intelligence is showing the same patterns as earlier investment booms that eventually collapsed, according to BCA Research. The firm warned that the current AI surge could lose momentum within a year.
In its latest report, written by chief global strategist Peter Berezin, BCA said its review of past capital-expenditure booms shows that “AI is following the same script as those ill-fated cycles.”
The study looked at several major historical investment waves, including 19th-century railway expansions, the electrification boom of the 1920s, the dot-com bubble of the late 1990s, and multiple periods of rapid growth in the oil sector.
BCA Research identified five recurring themes across these cycles.
Lesson #1: Investors often underestimated the S-shaped path of technology adoption. This misunderstanding led to unrealistic expectations about how quickly new technologies would scale.
Lesson #2: Revenue estimates were frequently too optimistic, as forecasts did not account for how sharply prices would fall once competition increased. This mismatch later hurt profitability.
Lesson #3: Debt became a growing source of funding, mirroring past periods when easy financing increased risk and amplified downturns once growth slowed.
Lesson #4: Asset prices tended to peak before investment spending rolled over. BCA described this timing as a common feature of speculative markets.
Lesson #5: Capital-spending downturns often dragged on the broader economy, which then put further pressure on asset prices.
Based on these historical parallels, BCA Research believes the current AI cycle may be approaching its peak. The firm wrote that it expects the boom to end within the next six to twelve months. It also said analysts are watching for a “Metaverse Moment,” which would signal when to “turn maximally defensive on stocks.”
