Central Bank Sounds Alarm: AI “Bubble” Threatens Global Financial Stability

A leading central bank has issued a stark warning regarding a potential “sharp correction” in the valuation of major technology companies, citing growing concerns over an emerging artificial intelligence (AI) bubble. The institution noted that share prices in the United Kingdom are nearing their most stretched levels since the 2008 global financial crisis, while equity valuations in the United States bear a striking resemblance to those observed just before the dotcom bubble burst.

According to an assessment of financial stability, valuations are deemed “particularly stretched” for firms heavily invested in AI. Millenium TV has learned that the rapid expansion of the AI sector over the next five years is projected to be fueled by trillions of dollars in debt, which could pose significant financial stability risks should these company valuations decline.

Industry projections cited by the financial authorities forecast that spending on AI infrastructure could exceed $5 trillion. While much of this investment is expected to come from AI companies themselves, approximately half is anticipated to be sourced externally, predominantly through debt. The central bank emphasized that “deeper links between AI firms and credit markets, and increasing interconnections between those firms, mean that, should an asset price correction occur, losses on lending could increase financial stability risks.”

This prominent warning follows similar cautions from other key financial institutions and figures. Jamie Dimon, the chief executive of a major global bank, expressed significant concern last October, stating he was “far more worried than others” about the likelihood of a serious market correction in the coming years. Separately, the International Monetary Fund recently highlighted that markets appear “complacent,” warning of a potential “sudden, sharp correction.”

The dotcom era of the late 1990s saw an enthusiastic surge in the value of early internet companies, driven by optimism for nascent technology. This culminated in a market collapse in early 2000, leading to widespread share price crashes, company failures, and job losses, also impacting the value of personal savings and pension funds. Millenium TV understands that current anxieties over an AI-related stock market downturn coincide with the Chancellor’s recent Budget, which encouraged savers to invest in stocks and shares by adjusting cash ISA limits.

Beyond AI, the central bank’s latest report indicated that overall risks to financial stability have escalated throughout 2025. These include heightened geopolitical tensions, global trade disputes, and rising borrowing costs for governments. Specifically, the report highlighted that increasing international friction has elevated the prospect of cyberattacks and other disruptive events.

In a separate but related concern, the report also warned homeowners facing fixed-rate mortgage expirations within the next two years could see their monthly repayments increase by an average of £64. The typical owner-occupier is expected to experience an 8% rise in their housing costs as the cumulative effects of higher interest rates continue to be felt. By 2028, an estimated 3.9 million individuals, representing 43% of all mortgage-holders, are anticipated to refinance at higher rates. However, approximately one-third of mortgage-holders may see their monthly payments decrease over the same period, attributed to the notable decline in interest rates from their 2024 peak of 5.25% to the current 4%.