Warning of the risk of an AI stock bubble

VTV.vn - BoE warns that the risk of an AI stock bubble could lead to a major correction, causing a chain reaction on the UK economy and global markets.

Bank of England (BoE). (Source: AFP/VNA)

The Bank of England (BoE) has just warned that the risk of a bubble from AI stocks could create a large-scale adjustment, causing damage to the economy . This is the strongest warning the BOE has given related to AI.

According to the BOE’s Financial Policy Committee, stock valuations are relatively high by many measures, especially for AI companies. The agency believes that the risk of a sharp market correction similar to the “dotcom bubble” is increasing.

This could have a major impact on the UK economy, which is a major international financial centre, as well as creating a "domino effect" that spreads to global markets.

But Jensen Huang, CEO of AI chipmaker Nvidia, argues that the current AI stock boom is different from the dotcom bubble. Huang says the current wave of growth is driven by large, profitable companies, and spending in the sector is still in its early stages. He notes that the top tech companies are now worth about $2.5 trillion, compared with just $30-$40 billion for internet companies in 2000.

Policymakers are concerned that the capital flowing into these companies may not deliver the expected returns, as the market currently reflects only potential growth prospects.

Meanwhile, International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned that high stock prices pose a growing risk to global financial stability. She said current valuations are masking systemic weaknesses, and compared the current situation to the dotcom bubble of the early 2000s, which ended in a major stock market crash.

Ms. Georgieva also said that if there was a sharp adjustment, tightening financial conditions could drag down global growth, expose weaknesses and make developing countries suffer particularly severely.

Source: https://vtv.vn/canh-bao-nguy-co-bong-bong-co-phieu-ai-100251010154612611.htm