The Bank of England Sounds Alarm on AI Valuations
The Bank of England recently raised concerns over soaring valuations in AI technology, indicating a potential global market “correction.” Key insights include:
- Sudden Correction Risks: Policymakers warn about asset repricing, particularly of US dollar assets, if the Federal Reserve’s credibility is shaken.
- Valuation Surges: Companies like OpenAI have seen staggering valuations—$500bn, up from $157bn last October—while Anthropic’s valuation almost tripled to $170bn.
- Market Vulnerabilities: The Financial Policy Committee highlights that equity markets, especially in tech, are overvalued, posing significant risks if AI growth expectations diminish.
- Research Concerns: MIT reveals 95% of organizations see no returns on generative AI investments, casting doubts on future profitability.
- External Pressures: The Trump administration’s ongoing critique of the Federal Reserve signals potential instability in financial markets.
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