The AI-fueled stock market rally is 'overextended' and similar to the dot-com era mania, veteran economist David Rosenberg warns

• David Rosenberg said the stock market rally is similar to the dot-com era collapse.
• The veteran economist warned that the rally is way overextended due to the AI frenzy.
• Rosenberg believes in AI long term, but "the current environment is taking on a mania of sorts."

The stock market's rally, fronted by the artificial intelligence frenzy, will be short-lived like the dot-com era boom, David Rosenberg said. 

The veteran economist, who is the president and founder of Rosenberg Research, said the current surge in stocks is overextended. Equities have been performing well despite a high-interest-rate environment, tightening credit conditions, and ongoing debt ceiling negotiations. 

The S&P 500 earlier this month hit 4,200 for the first time since August, and is up 9.6% since the start of the year. 

"I think that we have a price bubble," Rosenberg told CNBC on Thursday. "If you look at the six-month chart of the Nasdaq 100, you have to be blind not to see that, 'Okay, this is actually looks very weird, and it's way overextended.'"

This rally, in part, is on the back of surging AI interest. 

The tech-heavy Nasdaq Composite closed 1.7% higher on Thursday, fueled by chipmaker Nvidia's blockbuster earnings. The company's stock skyrocketed after the release of a glowing forecast for the second quarter, citing booming demand for its AI products. Nvidia, whose earnings call this week mentioned AI 43 times, closed 24% higher on Thursday.

"This type of corporate behaviour is not too different from what took place in the dotcom bubble, with company after company satisfying investors' appetite for news on how it plans to incorporate the internet into its business — or boosting stocks just because they added '.com' to the name," Rosenberg wrote in a Financial Post column, released on Thursday.

The economist added: "So, while we are a believer in the long-term benefits of AI, from an investor standpoint, the current environment is taking on a mania of sorts."

UBS's Art Cashin echoed similar sentiments, describing AI as the "new mini-version of the dot-com."

"Everything you hear, it's going to have an AI inflection, everything from new drugs and medicine, to predictive natures of all types," Cashin told CNBC on Thursday. "This is going to be interesting."