A well-known Wall Street bear is bearish on the market in 2026 and predicts that the Federal Reserve will accelerate interest rate cuts.

ChainCatcher reports that BCA Research, a market research firm led by prominent Wall Street short-seller Peter Berezin, released a new report titled "Return of Nasdaq," offering a cautious outlook for the market. Its core argument is that the artificial intelligence boom is coming to an end, and that US economic activity will slow significantly.

BCA Research states that the problem of over-investment in artificial intelligence should have surfaced long ago. By 2025, investment in US technology and software is projected to reach 4.4% of GDP, approaching levels seen during the dot-com bubble. Given that AI assets typically depreciate at around 20% annually, this means tech giants will incur $400 billion in depreciation costs annually—an amount exceeding their total profits in 2025.

BCA Research also noted that the forward price-to-earnings ratio of the S&P 500 will reach 22.6 times in early 2026, far exceeding the historical median of 18 times. The already fragile stock market will be even more vulnerable under the impact of the collapse of the optimistic narrative surrounding artificial intelligence. BCA Research predicts that "almost all sectors of the US stock market will collapse in the second half of 2026." However, this will also prompt the Federal Reserve to accelerate its pace of interest rate cuts in the second half of 2026, with the federal funds rate falling to 2.25% and the 10-year US Treasury yield falling to 3.1% by the end of 2026.