Stocks are in a late-stage bubble and poised to crash 21% next year, while Treasury yields above 5% will signal a new era of tight money, analysts say

Analysts warn the AI-led stock rally may be a late-stage bubble — Capital Economics sees the S&P 500 hitting ~8,250 by end‑2026 then plunging about 21% to ~6,500 in 2027.
Several red flags mirror the dotcom era: sky-high valuations, stretched expected earnings growth and extreme market concentration in a few AI winners.
Rising borrowing costs are the wildcard — the 10‑year Treasury near 5% could make funding AI mega‑projects much harder and help trigger a downturn.