The Bank of England warned that an AI-fueled bubble could burst and that a “sharp market correction” could be approaching.
The UK central bank said that valuations of US stocks resembled the peak of the 2000s dot-com craze, and that 30% of the S&P 500’s total value came from just five AI-focused companies, the most concentrated the index has been in 50 years.
The BoE also warned that threats to the US Federal Reserve’s independence could cause a run on the dollar.
There are other warning signs: Investors are increasingly piling into alternative assets such as gold and crypto, The Wall Street Journal reported, hedging against a possible collapse.