Finance expert Aswath Damodaran's warning on AI crash: 'When the correction comes, the pain will be more intense'

Aswath Damodaran, the NYU Stern professor known as the Dean of Valuation, has warned that the ongoing AI investment boom could trigger a correction more painful than the dot-com bust. He highlighted that trillions of dollars in AI capital expenditure, largely debt-funded through private capital, creates risks of distress and default that could spill over into the broader economy. He drew parallels to the 2008 financial crisis, noting that if AI investments fail, the damage would extend beyond equity shareholders to lenders and society at large.