The Bank of England warns: The AI stock bubble may trigger a "sudden pullback" in global stock markets.

On October 8, the Bank of England warned that the surge in valuations of artificial intelligence companies, after stock prices reached levels comparable to the dot-com bubble, is exacerbating the risk of a "sudden pullback" in global financial markets. The Bank of England pointed out that the recent defaults in the U.S. auto credit market have heightened the risk of a market reversal, stating that these situations "validate the risks that the Central Bank has been emphasizing in the market-based financial system." Other risks include escalating political pressure faced by the Fed— which "could lead to a sharp repricing of dollar assets"— and the uncertainty caused by political deadlocks in France and Japan, which could also disrupt the debt markets. The Bank of England stated that multiple indicators show that "stock market valuations appear elevated, especially for technology companies focused on artificial intelligence." "This situation, combined with the increasing concentration of market index constituents, makes the stock market particularly vulnerable if market expectations regarding AI turn pessimistic." This is the clearest warning yet from the Bank of England regarding the potential bursting of an AI-led market bubble. In its financial stability report released in July, it only mentioned artificial intelligence from the perspective of risks associated with Financial Institutions using AI technology. ( Jin10 )