Bank of England warns of growing risk that AI bubble could burst
4 hours ago
- #AI valuations
- #Bank of England
- #Federal Reserve
- The Bank of England warns of a growing risk of a 'sudden correction' in global markets due to soaring AI tech valuations.
- Investor optimism around AI has led to inflated valuations, with companies like OpenAI and Anthropic seeing significant increases.
- The Bank's financial policy committee notes stretched equity market valuations, especially for AI-focused tech firms, making markets vulnerable to corrections.
- MIT research indicates 95% of organizations see no return on generative AI investments, raising concerns about AI's economic impact.
- Potential bottlenecks in AI progress (power, data, supply chains) or conceptual breakthroughs could harm valuations of AI-related companies.
- Threats to Federal Reserve independence under Trump's administration could lead to sharp repricing of US dollar assets and global financial instability.
- Trump's trade wars pose additional risks, with impacts not yet fully realized.