Goldman Sachs CEO David Solomon cautioned that equity markets could face a significant correction within the next one to two years, following a period of record-breaking gains driven by artificial intelligence enthusiasm. Speaking at Italian Tech Week in Turin on Friday, Solomon said that markets tend to “run ahead of themselves” during periods of major technological transformation.
Markets run in cycles
“Markets run in cycles, and whenever we’ve historically had a significant acceleration in a new technology that creates a lot of capital formation and new companies around it, you generally see the market run ahead of the potential,” Solomon said. “There are going to be winners and losers.”
He drew parallels to the internet boom of the late 1990s and early 2000s, when widespread adoption created some of today’s largest corporations—but also led to the painful collapse of the dot-com bubble.
“You’re going to see a similar phenomenon here,” Solomon added. “I wouldn’t be surprised if in the next 12 to 24 months we see a drawdown in equity markets. There will be a lot of capital that doesn’t deliver returns, and when that happens, people won’t feel good.”
AI boom drives record highs, but risks are mounting
The global market rally of recent years has been powered by surging optimism around artificial intelligence. Investors have poured billions into AI-focused firms such as Microsoft, Alphabet, Palantir, and Nvidia, while also backing startups developing next-generation technologies. The momentum has pushed major indexes on Wall Street and beyond to all-time highs, even as U.S. trade policy uncertainty under President Donald Trump briefly dented sentiment earlier this year.
Despite the strong performance, some analysts are warning that parts of the AI sector are showing signs of overheating. “I’m not going to use the word bubble,” Solomon said, “but I do know people are out on the risk curve because they’re excited. And when investors are excited, they tend to focus on what can go right and overlook what can go wrong. There will be a reset—there will be a check at some point.”
Growing chorus of caution
Solomon’s comments add to a growing list of warnings from influential investors and executives. At the same event, Amazon founder Jeff Bezos described the current AI boom as an “industrial bubble.” Earlier in the week, billionaire investor Leon Cooperman told CNBC that markets were in the “late innings” of a bull run where speculative excesses can form—a concern also echoed by Warren Buffett.
Karim Moussalem, chief investment officer of equities at Selwood Asset Management, said in a LinkedIn post that “the AI trade is beginning to resemble one of the great speculative manias of market history,” highlighting what he called “enormous risks” that could unravel quickly.
Solomon remains optimistic on long-term potential
Despite warning of a potential pullback, Solomon emphasized that the long-term outlook for artificial intelligence remains highly positive. “I sleep very well. I’m not going to bed every night worried about what will happen next,” he said. “The technology is expanding, new companies are being formed, and the potential for AI deployed across enterprises is very powerful. It’s an exciting time.”
