Leon Cooperman is a billionaire who has seen a lot of market cycles. He once led Goldman Sachs, and today he runs Omega Advisors, his own investment firm.
So when he tells CNBC that a recession is coming next year, it is worth paying attention. "I think that we're going to have a recession sometime next year, and that will probably bring the market down," he said.
Cooperman is not shy about acting on his views. He has a negative market outlook right now and is avoiding technology stocks.
He also thinks investors could rush to sell if bad news lands. "They sell stocks whenever there's a negative announcement," he said.
Cooperman thinks the current economic cycle is ending. He expects fading excitement around AI to stir up turbulence, and he sees a troubling echo in history.
The Nifty Fifty, a group of big growth stocks that were Wall Street darlings in the mid-1900s, collapsed during the 70s when oil prices spiked. Cooperman thinks today's market could be setting up for a repeat.
"The three most dangerous words in investment land vocabulary are: 'It's different this time,'" he said. He means investors are treating today's AI leaders as if they are immune to the kind of cycle that hit the Nifty Fifty.
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He also finds the mood on Wall Street suspicious. "I find it interesting that everyone is bullish," Cooperman said.
Inflation is another concern. Brent crude, a global benchmark for oil, hovered near $89 per barrel on Monday.
The economy is showing some cracks, too. July retail sales fell 0.6% against an expected 0.1% increase, according to the Commerce Department. That is not a crash, but it is a warning sign.
Most of Wall Street sees things differently. Forecasters remain confident that AI demand is durable and that the money flowing into AI will pay off.
They have data on their side. Aside from the July retail sales miss, the numbers look strong.
FactSet data shows the S&P 500, the index that tracks America's biggest public companies, heading for profit growth of more than 50% in the current quarter from a year earlier. That would be the fastest pace since the pandemic-era stock boom.
After a recent shift in AI-related investing, the Nasdaq 100, a stock index heavy on technology names, is still up 19% from January and on pace for double-digit annual gains. The Atlanta Fed's latest estimate projects third-quarter GDP growth at 4.3%.
GDP, short for gross domestic product, is the broadest measure of economic output. That is a healthy pace, even with Cooperman predicting a downturn.
Cooperman has been warning about a downturn for a while. Speaking on Fox Business earlier in 2026, he said a recession might arrive in late 2026.
Now he is pointing to 2027. He also thinks S&P 500 earnings estimates are mispriced, meaning the profit expectations baked into stock prices may be too high.
If he is right, 2027 could be a rough year for stocks. None of this is guaranteed, though.
The market could keep climbing if AI profits keep landing and the economy keeps growing.
But Cooperman's warning is a reminder that good times do not last forever. Your portfolio has been riding a wave of AI optimism, and if that wave fades, the ride could get bumpier.
The bottom line: The data will tell you more than any single forecast. Oil prices, retail sales, and corporate earnings will show whether 2027 brings a recession or another year of growth.
No one knows when stocks will drop, but the free Always Be Buying eBook shows a steady path.