The Bank of England has warned of a rising risk of a sudden correction in global markets as it raised concerns about soaring valuations of leading AI tech companies.

Its financial policy committee said equity market valuations, especially for AI-focused firms, appear stretched and could be exposed if optimism around AI dims.

OpenAI’s value jumped from US$157 billion last October to US$500 billion, while Anthropic soared from US$60 billion in March to US$170 billion last month.

The committee noted investors may not have fully accounted for risks, warning that a sudden correction could cause finance to dry up for households and businesses.

Material bottlenecks to AI, such as power, data, or commodity supply chains, and setbacks in conceptual breakthroughs, could also hurt company valuations.

The Bank also warned that a loss of trust in the US Federal Reserve, amid ongoing political attacks, could trigger a sharp repricing of US dollar assets and cause global spillovers.

🔗 Source: The Guardian