The Bank of England has warned of a pattern of pure-play AI companies achieving extremely high valuations, which could form a potential bubble, as per details of a Financial Policy Committee meeting.
The meeting—which took place on October 2nd—marked the emerging sector as a potential risk while mapping out challenges present in the global economy. All-time highs for equity market valuations were noted by the Bank, driven by strong earnings figures in Q2.
Equity valuations were observed to be “stretched, particularly in backward-looking metrics in the US”. The BoE ascribed multiple downside risks associated with AI-driven evaluations, mainly a re-evaluation of future earnings due to more competition or unsatisfactory progress and capabilities associated with AI adoption.
Amazon chairman Jeff Bezos has taken note of the market boom and the trend of companies getting lucrative funding for AI projects, with investors unable to decide where to allocate capital, commenting on it at the Italian Tech Week 2025.
“The second thing that happens when people get very excited, as they are today about artificial intelligence, for example, is every experiment gets funded. The good ideas and the bad ideas. And investors have a hard time in the middle of this excitement, distinguishing between the good ideas and bad ideas,” said Bezos.