Goldman Sachs, GS, CEO says there will be a stock market drawdown, and people "won't feel good"

Goldman Sachs CEO David Solomon cautioned Friday that the ongoing AI investment boom may be overextended — and that stock markets could soon face a correction.

Speaking at Italian Tech Week in Turin, Solomon said that while artificial intelligence has powered major U.S. stock indexes to record highs this year, not every investment tied to AI will yield the big returns investors expect.

He compared the current enthusiasm to the dot-com era of the late 1990s and early 2000s, when an explosion of capital into internet companies was followed by a steep market collapse.

“You’re going to see a similar phenomenon here,” Solomon said. “I wouldn’t be surprised if, in the next 12 to 24 months, we see a drawdown in equity markets.”

Solomon added that “a lot of capital that’s deployed will turn out not to deliver returns, and when that happens, people won’t feel good.”

Earlier this year, President Trump announced a $500 billion national AI initiative in partnership with SoftBank, OpenAI, and Oracle, aimed at expanding AI infrastructure across the U.S. over the next four years.

AI optimism has helped propel Wall Street higher, even after tariff concerns briefly shook markets earlier in the year. But the rally has also raised concerns of a potential AI-driven bubble, as investors pour billions into companies like Microsoft, Alphabet, Palantir, and Nvidia — and into massive, costly data center projects needed to power new technologies.

“I’m not going to use the word bubble,” Solomon said, “because I don’t know what the path will be. But I do know people are out on the risk curve because they’re excited. And when investors are excited, they focus on what could go right and ignore what could go wrong.”

He warned that a market reset or pullback is inevitable:

“There will be a reset, there will be a check at some point, there will be a drawdown. The extent of that will depend on how long this bull run continues.”

Solomon concluded by noting that markets move in cycles:

“Whenever a breakthrough technology drives massive capital formation and a surge of new companies, the market typically runs ahead of reality. That’s just how these things unfold.”