In a direct and pointed warning, the Bank of England has singled out artificial intelligence stocks as being “particularly exposed” to a market downturn. The Financial Policy Committee (FPC) stated that “stretched” valuations in the sector have elevated the overall risk of a “sharp market correction” for the global economy.
The central bank’s concern is fueled by the incredible speed and scale of valuation growth for AI-focused firms. OpenAI’s worth has climbed to $500 billion, and Anthropic’s to $170 billion, figures the FPC believes are based more on speculative fervor than on solid financial performance. A shift in this sentiment could prove calamitous.
Undermining the current optimism is research from the Massachusetts Institute of Technology, which found that 95% of corporate investments in generative AI are currently yielding no financial return. This stark finding suggests the market may be heading for a painful reality check, which the Bank warns could trigger a “sudden correction.”
Layered on top of this tech-specific vulnerability is a significant geopolitical risk. The FPC expressed unease over Donald Trump’s persistent threats against the independence of the US Federal Reserve, a cornerstone of global economic stability.
A loss of confidence in the Fed’s impartiality could lead to a “sharp repricing of US dollar assets” and a spike in global market volatility. The FPC was clear that the UK would be in the direct line of fire, stating that the “risk of spillovers” from such global shocks is “material” and could disrupt the British financial system.
‘Particularly Exposed’: BoE Singles Out AI Stocks in Market Risk Warning
