Longtime investor Leon Cooperman believes we are in the late innings of a bull market where bubbles can form and risks rise, a stage of the cycle that Warren Buffett had warned about.

The chair and CEO of the Omega Family Office read a quote from the “Oracle of Omaha” on CNBC’s “Money Movers” Wednesday, which he said fits neatly with what he’s seeing right now.

“Once a bull market gets under way, and once you reach the point where everybody has made money no matter what system he or she followed, a crowd is attracted into the game that is responding not to interest rates and profits but simply to the fact that it seems a mistake to be out of stocks,” Buffett said in 1999, according to a Fortune Magazine article.

Buffett believes bull markets often end not only when valuations are stretched, but also when there is irrational exuberance and when the rally is fueled by momentum.

“It’s what’s going on now,” Cooperman said, adding that investors’ mood is very similar and valuation on artificial intelligence companies is “ridiculously high.”

The S&P 500 has surged almost 40% since its April lows, returning to all-time highs. The rally has been led by mega-cap tech giants, which have invested billions in artificial intelligence and are being valued richly on the potential of this emerging era.

The famous Buffett Indicator — the ratio of total U.S. stock market value to GDP — is also flashing one of the clearest signs of market exuberance. The gauge is sitting at record highs well above the peaks reached during the Dotcom Bubble as well as the pandemic-era rally in 2021, suggesting equity prices are running far ahead of the underlying economy. At 217%, it’s also beyond the level Buffett once said is “playing with fire.”

While Cooperman thinks stocks could be risky with the late-cycle crowd behavior, he dislikes government bonds even more due to elevated inflation. Bonds pay fixed nominal interest, so higher inflation erodes their real returns.

“Stocks are less risky than bonds at these levels,” he said.