Bank of England Warning: AI Stock Bubble Could Trigger Global Stock Market 'Sudden Pullback'

BlockBeats News, October 8th, the Bank of England warned that the soaring valuations of artificial intelligence companies are exacerbating the risk of a global financial market "sudden pullback" as stock prices reach levels comparable to the dot-com bubble.

The Bank of England pointed out that in recent months, the surge in defaults in the U.S. auto loan market has heightened market reversal risks, stating that these situations "confirm some of the risks in the market-based financial system that the central bank has been emphasizing." Other risks include the escalation of political pressure facing the Federal Reserve, which "might lead to a sharp repricing of dollar assets," and the uncertainty triggered by political stalemates in France and Japan, which could also disrupt the debt market. The Bank of England stated that multiple indicators show "stock market valuations appear excessive, especially for tech companies focused on artificial intelligence."

"This situation, coupled with the increasing concentration of market index constituents, means that if market expectations regarding the impact of AI turn pessimistic, the stock market will be particularly vulnerable." This is the Bank of England's most explicit warning to date that the AI-led market bubble could burst. In its Financial Stability Report released in July, it only mentioned artificial intelligence from the perspective of the risks posed by financial institutions applying AI technology. (FX678)