The stock market is partying like it's 1999, driven by the explosive growth of Artificial Intelligence (AI) stocks. But as valuations for the "Magnificent Seven" (Nvidia, Microsoft, etc.) reach stratospheric heights, experts are whispering the dreaded "B-word": Bubble.

A Deutsche Bank survey found that 57% of investors see a "tech bubble bursting" as the biggest risk to global stability in 2026. For the average person with a pension or an ISA, this isn't just Wall Street gossip; it’s a threat to retirement savings.

5 Things You Need to Know

1. Bubbles are Invisible (Until They Pop): "You never know if there has been a bubble until after the event," warns Daniel Casali of Evelyn Partners. While prices are high, they are driven by real earnings growth, unlike the dotcom era. The question is: can AI profits keep growing forever?
2. Contagion Risk: If the AI bubble bursts, it won't just hurt tech. "All other boats will start to sink," says Casali. A crash in Nvidia drags down the S&P 500, which drags down global pension funds.
3. You Are Already Exposed: Even if you don't own tech stocks, your pension fund does. Most global tracker funds are heavily weighted towards US tech. Dan Coatsworth of AJ Bell notes that the US accounts for 72% of the MSCI World Index.
4. Don't Panic Sell: Market timing is a loser's game. Selling now might mean missing out on further gains. The best defense is diversification—holding bonds, gold, or stocks in boring sectors like utilities.
5. The "Slop" Factor: The risk isn't just financial; it's product-based. If AI starts producing "slop"—low-quality, hallucinated content—companies might pull back spending, popping the valuation balloon.

The Bottom Line

AI is real, but the hype might be priced in for perfection. Investors should buckle up; 2026 promises to be a volatile ride. As the old adage goes: "The market can remain irrational longer than you can remain solvent."