The Bank of England warned on Wednesday that global markets could face a sharp correction if investor sentiment toward artificial intelligence sours, according to a Financial Policy Committee report released after last week’s meeting.
The central bank noted that US stock valuations resemble levels seen near the dot-com bubble’s peak in certain measures, with AI-focused firms now holding an unusually large share of market value.
In its quarterly assessment, the BoE said the risk of a quick market reversal had risen, and that spillovers to Britain’s financial system from an AI-driven shock were considered material by the committee chaired by Governor Andrew Bailey.
Meanwhile, the S&P 500 reached a record high earlier in the week, while the top five companies — Nvidia, Microsoft, Apple, Amazon and Meta — accounted for roughly 30% of the index’s valuation, the most concentrated reading in five decades.
Reuters described the BoE’s warning as the strongest to date regarding AI-related declines, underscoring potential implications for UK banks and financial stability if market sentiment deteriorates.
