CSC: US Tech Bull Market May End by the 2028 Election
Taylor Wilson
CITIC Securities mapped five paths that could end the current US tech bull market, warning that political backlash in the 2028 presidential election is the most time-specific — and hardest to price in — tail risk.
Why has the rally stalled?
Since June, US equities have traded sideways at highs. Tech valuations have little room for further multiple expansion — any upside now depends on actual EPS growth.
This means → the year-to-date rally has already priced in most of 2026 earnings expectations. The next leg up likely waits until the second half, when the market shifts focus to 2027 estimates.
In plain terms = the stock price already counts "what they'll earn next year." Short term, there is no new story to tell.
What are the five paths to the end of the bull market?
Path 1: Leverage overheating. US margin balances relative to the index have hit an excess of 25%. Historically, that indicator breached 20% three times — right before the 2000, 2008, and 2022 crashes. This means → on a linear extrapolation, the probability of a major top within one year is real.
Path 2: China's AI catch-up. Chinese large language models are approaching US performance levels while consuming fewer resources. The market is beginning to question whether US Big Tech's massive CapEx is justified. Near term, the report flags the launch of Kimi K3 — and whether it can replicate DeepSeek's shock to US equities earlier this year.
Path 3: Old-economy comeback. Once the K-shaped divergence — tech strong, everything else weak — starts to converge and the traditional economy recovers, capital rotates out of tech. Historical precedent: when the Nasdaq crashed in 2000, the Dow held firm; when the Nasdaq corrected in early 2026, the Dow hit new highs.
Path 4: Election-driven political backlash. If wealth inequality keeps widening, anti-AI sentiment could be weaponized by both parties in the 2028 election. Campaign platforms calling for tighter regulation, antitrust action, or higher taxes on AI giants could force-interrupt the tech bull run. The report draws a parallel to Microsoft's antitrust ruling and breakup threat in April 2000, which accelerated the dot-com bust.
How does the fifth path connect to today's valuations?
Path 5: The AI thesis is disproved + the Fed tightens. The market already harbors this fear — visible in the stalling of tech multiples.
Under current high rates, real estate and consumer sectors struggle to improve organically. The market's only hope is an AI application-layer breakout that lifts growth across industries into a "new cycle."
In plain terms = if AI cannot turn a profit and rates stay high, there is nothing to hold up tech's premium valuation.
Why does 2028 look like the deadline?
CITIC Securities concludes: on a medium-term view, 2028 could be the "hard deadline" for US tech.
Two outcomes: either the bubble resolves beforehand — via organic means (application-layer breakout, a new-cycle handoff) or external forces (China catching up, a Fed rate hike) — or K-shaped divergence deepens, and the election delivers a policy shock.
This reflects a key asymmetry: among the five paths, political backlash has the most fixed timeline — the election date is set — and is the hardest for markets to price in advance.
What should investors watch short term?
The report warns: near term, the Nasdaq cannot be ruled out from falling more than 10% from its prior high.
This means → even setting aside the medium-term "deadline," the current range-bound trading itself carries correction risk. The trigger could be margin-call liquidation or a new round of disruption from Chinese AI.
In plain terms = the bull market is not over, but this is not the time to chase highs blindly.
Content is for reference only, not financial advice.