On July 26, 2026, Peter Schiff spotlighted warning signs from Japan’s bond market turmoil and the recent AI stock selloff, suggesting bigger issues ahead for US markets.
This week, Alphabet’s shares dropped 10% after announcing higher capital expenditures on AI, while Oracle tumbled 41% year-to-date amidst investor doubts over AI spending returns.
Meanwhile, Japan’s 30-year government bond yield surged near 4%, a record level, as the yen weakened to its lowest point against the dollar in 40 years. The country’s public debt exceeds 200% of GDP, and the Bank of Japan faces a dilemma between hiking rates sharply or risking a recession.
Schiff pointed to these developments as a deeper threat than the AI sector’s stumble. The 30-year bond yield spike signals growing stress in Japan's massive debt market, which may lead to heavy Treasury selling pressure.
On the tech front, SpaceX shares declined 7.7%, now 49% off their post-IPO high, with its public float set to increase eightfold by year's end, potentially driving further volatility. Tesla dropped 18%, falling 35% from its 52-week peak, costing Elon Musk an estimated $100 billion in a single week.
Schiff compared current AI investments, totaling nearly $750 billion annually, to the dot-com bubble era. Many early internet darlings failed to generate expected returns and went bankrupt despite massive spending. While he acknowledges AI’s long-term promise, he warns that the market may be too optimistic about short-term benefits.
Japan’s bond market stress contrasts with US investors’ initial focus on AI. Schiff’s comments follow a week marked by sharp declines in major tech names: Meta fell 7.3%, Amazon 6.8%, and Microsoft 2.7%, bringing its year-to-date drop near bear market levels at 19.3%.
