Tech investor Dan Niles says the AI boom still has legs, but a brutal reset could follow. ANGELA WEISS / AFP via Getty Images

Dan Niles predicted AI stocks could tumble as much as 50% after the boom peaks in early 2027.

The tech investor said agentic AI will fuel the rally before triggering a reset across markets.

Niles said Google is best positioned for AI because it owns the industry's full stack.

Tech investor Dan Niles says the AI trade could be headed for a painful reset.

On an episode of the "Master Investor Podcast" on Tuesday, Niles, the founder and portfolio manager at Niles Investment Management, said that he believes AI-linked stocks could fall 30% to 50% in early 2027 after what he sees as an unsustainable surge in enthusiasm, capital spending, and market concentration.

"What do I think happens to these stocks sometime early next year from wherever they get to?…