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   Alarms bells ring as Bank of England warns of sharp market correction when AI   
   bubble bursts   
      
   Date:   
   Thu, 09 Oct 2025 13:49:39 +0000   
      
   Description:   
   The AI bubble will cause chaos if it bursts, and we could be nearing the peak.   
      
   FULL STORY   
      
   Mutterings continue to swirl about "an AI bubble" - Jeff Bezos has admitted   
   it, Sam Altman has admitted it, and now, financial institutions are beginning   
   to sound the alarm over the potential catastrophic crash the economy faces if   
   the bubble bursts.    
      
   The Bank of Englands financial policy committee warned the risk of sharp   
   market correction has increased, and that investors have not fully accounted   
   for these risks.    
      
   On a number of measures, equity market valuations appear stretched,   
   particularly for technology companies focused on artificial intelligence.    
   This  leaves equity markets particularly exposed should expectations around   
   the impact of AI become less optimistic, The Guardian reports . Boom and bust    
      
   Huge circular deals between Nvidia, AMD, OpenAI, and Oracle have seen    
   billions of dollars committed between the firms to fund chips,    
   infrastructure, and AI models - which has sparked serious concern;    
      
   "Today's valuations are heading toward levels we saw during the bullishness   
   about the internet 25 years ago If a sharp correction were to occur, tighter   
   financial conditions could drag down world growth, expose vulnerabilities,    
   and make life especially tough for developing countries," warned the head of   
   the IMF, Kristalina Georgieva .    
      
   Some research has even claimed AI-related capital expenditures have surpassed   
   the consumer in the US as the primary driver of economic growth in the first   
   half of 2025.    
      
   AI-related stocks have accounted for 75% of S&P 500 returns, 80% of earnings   
   growth and 90% of capital spending growth since ChatGPT launched in November   
   2022, said Michael Cembalest, chairman of JP Morgan Asset Management    
   Strategy.    
      
   Thats a hell of a lot of spending considering research recently revealed that   
   almost all (95%) of generative AI pilots are failing . If investors dont    
   start to see profit soon, the stock market valuations could suffer.    
      
   Real use-cases of AI have been faltering too, with Deloitte forced to refund   
   the Australian government after it used AI to produce an error-strewn report   
   that included false citations, fake footnotes, and made-up court quotes.    
      
   Although AI spending looks set to keep increasing for the foreseeable future,   
   some reports indicate AI use is actually now declining in large organizations   
   - which could signal the beginning of the end for the AI boom.    
      
   ======================================================================   
   Link to news story:   
   https://www.techradar.com/pro/security/alarms-bells-ring-as-bank-of-england-wa   
   rns-of-sharp-market-correction-when-ai-bubble-bursts   
      
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