Bank of England smells hint of dotcom bubble 2.0 in AI froth

The Bank of England's Financial Policy Committee has warned of the dangers of a sudden correction in the financial markets, owing to the value of tech and AI stocks, and has compared the risks to the dotcom bubble.

As hundreds of billions of dollars flow into AI infrastructure building, the UK's central bank said: "On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence (AI). This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic."

Recent weeks have seen a merry-go-round of tech deals with AI, processor, and infrastructure vendors committing to spend with each other and swapping stock in order to fuel expansion. Nvidia and AMD hatched deals with OpenAI that sent their share prices soaring, while Oracle enjoyed a stellar share price hike after ...