The stock market's stellar post-crisis run can't last forever, and the AI frenzy probably won't end well, Wharton professor Jeremy Siegel says

• The stock market's stellar 15-year performance can't last forever, Jeremy Siegel warned.
• The top economist pointed to the S&P 500's monster gains since the 2008 financial crisis.
• He also noted the frenzy for AI mega-cap tech stocks probably won't end well.

The stock market won't be able to continue its stellar post-2008 crisis performance forever — and Wall Street's excitement for AI stocks probably won't end well, according to Jeremy Siegel.

As the market approached the 15-year anniversary of the crash that followed the 2008 crisis, Siegel noted to investors that the enormous gains over that period have to end sometime.

The Wharton finance professor pointed to the stock market's run since the Great Financial Crisis, with the S&P 500 soaring from its trough following the 2008 crash. The benchmark index has jumped from a low of 666 in 2009 in the wake of the subprime mortgage crisis, to a high above 5,000, which it closed above for the first time ever last Friday. That's good fr an annual gain of 16.6%, or about 14% after inflation.

"This was an absolutely remarkable 15 years and investors should not expect this to continue," Siegel said in a WisdomTree note on Tuesday.

Siegel pointed to signs of "over-speculation" surrounding artificial intelligence stocks. Excitement for AI has pushed the Magnificent Seven — a group of mega-cap titans — to dominate the stock market, with the group accounting for most of the S&P 500's gains in 2023.

"I won't call this a bubble at these levels, but there is a frenzy of excitement and many trend followers are piling on the AI wagon. This can continue a long time until we get a big earnings miss, but we know if these trends last long enough, it does not end well," Siegel said.

His view mirrors those of other Wall Street commentators, who have warned of the dangers of investing in mega-cap tech stocks as the Magnificent Seven looks to be overvalued.

The exuberance for AI could be one of the biggest fads the stock market has seen in decades, one investing veteran told Business Insider, predicting that the most expensive stocks on the market could plunge as much as 70% in value.

But stocks look to be "reasonably priced" at the moment, Siegel said. The S&P 500 is trading at an earnings multiple of around 20x. That's considerably less expensive than the dot-com bubble in the 2000s: Back then, the index was trading around 30 times earnings, which prompted Siegel to call large-cap stocks a "sucker's bet" in a March 2000 op-ed for The Wall Street Journal.

"I don't think we are anywhere near levels that motivated that view," he said.

Siegel has been bullishness on stocks for awhile now, despite his trepidation around big-cap tech. In a recent interview with CNBC, he predicted the S&P 500 could rise another 8% from its current levels, implying that it would end the year around 5,400.