Bank of England warns AI stock bubble rivals 2000 dotcom peak
AI bubble talk is in the air, and among the chorus of voices warning of an AI-fueled market bubble (which includes OpenAI CEO Sam Altman and Amazon's Jeff Bezos) is the Bank of England, which warned on Wednesday that global financial markets could face a sharp correction if investor sentiment turns negative on AI.
The UK central bank said US stock valuations resemble those seen near the peak of the dotcom bubble on some measures, with AI-focused companies making up an unprecedented portion of market value.
In its quarterly report derived from a meeting of its Financial Policy Committee that took place last week, BoE wrote that "the risk of a sharp market correction has increased." Reuters notes that it's the BoE's strongest warning to date about potential AI-driven market declines. The committee, chaired by Governor Andrew Bailey, said spillover risks to Britain's financial system from such a shock were "material."