Prominent economist David Rosenberg has issued a stark warning to investors, labeling the current frenzy around artificial intelligence (AI) stocks as a 'classic bubble'. In an interview with the Financial Post's Larysa Harapyn, the founder of Rosenberg Research advised investors to proactively limit risk in their portfolios as they look toward 2026.
AI Mania Mirrors Past Market Excesses
Rosenberg's analysis draws parallels between the explosive growth in AI-related investments and historical market bubbles. He suggests that the intense speculation and soaring valuations in the sector exhibit the hallmarks of classic financial mania, where prices detach from underlying fundamentals. This environment, he cautions, creates significant vulnerability for investors who have piled into the trend.
A Looming Recession Risk in 2026
Beyond the AI bubble, Rosenberg pointed to a broader economic threat that markets are currently ignoring. He stated that no one is priced for a potential recession in 2026, even though he believes the odds of such a downturn have increased. This disconnect between market optimism and underlying economic risks forms the core of his cautionary message for the coming year.
The interview, published on December 22, 2025, features Rosenberg's direct advice for portfolio management. He emphasizes the need for defensive strategies to navigate the dual threats of an overextended tech sector and a deteriorating macroeconomic outlook.
Key Takeaways for Canadian Investors
Rosenberg's warnings carry particular weight for the Canadian investment community, which is deeply integrated into global financial markets. His call to action is clear: investors should reassess their exposure to high-flying AI stocks and ensure their portfolios are built to withstand potential economic turbulence. The central thesis is that prudence and risk management are essential, as the current market sentiment appears to be discounting the very real possibility of a 2026 recession.
