Bank of England warns of the explosion of the artificial intelligence bubble

The UK Central Bank is concerned about the explosion of the artificial intelligence bubble.

The bank’s financial policy committee said: “In a number of standards, the stock market reviews seem to be extended, especially for technology companies that focus on artificial intelligence,” the bank’s financial policy committee said. The last meeting. “This, when it is associated with increasing focus within market indicators, leaves stock markets especially if expectations about the impact of artificial intelligence become less optimistic.”

The bank also warned that the stock market price ratings were similar to the peak of the Dotcom bubble, and the market share was for the five largest members of the Standard & Poor’s 500 index at its highest concentration in 50 years. It is not surprising that these five companies are technology giants who focus on artificial intelligence such as NVIDIA, Microsoft, Apple, Amazon and Meta.

All of these five companies are spent Interesting numbers on artificial intelligenceThe stock market loves it. Microsoft became the second market value of $ 4 trillion earlier this year after publishing its largest expectations for separate spending ever. On the other hand, NVIDIA is the first and only company in the world with a market value of $ 4.5 trillion.

The bank said: “The material bottlenecks that confront the progress of artificial intelligence – from energy, data or the supply chains of goods – in addition to conceptual breakthroughs that change the expected infrastructure requirements for artificial intelligence to develop and use strong artificial intelligence models can also harm assessments, including companies that derive their revenue expectations from high levels of expected investment in the infrastructure of intelligence Artificial.

Federal Reserve researchers It issued a similar warning earlier this year. While this alert did not determine the direct danger to the artificial intelligence bubble, the researchers indicated that the danger that comes with the construction of an expensive infrastructure is very very quickly with regard to the expected demand is that the demand may not grow as expected. The Federal Reserve warned that this may lead in this case to “catastrophic consequences”, and likened it to excessive expansion of the nineteenth century railway, which led to economic depression at the beginning of the century.

These major artificial intelligence companies with high revenue expectations are also It relies heavily on They are financially each other, which increases fears of a sequential effect if A bubble exploded. Artificial intelligence companies conclude billions of dollars with each other over and over again, which leads to pumping more money into the system and enlarged stock assessments with each deal.

While this happens, some experts admit an exaggeration in estimating the value of the currency.

Torsten behavior, chief economist at Apollo Global Management, said in July that the current artificial intelligence bubble is actually. worst From the Dotcom bubble in 1999. Sam Altman, CEO of Openai, also admitted in August that he believed the investors.Very excited about artificial intelligence.“

The main negative risks of exaggeration in the evaluation of artificial intelligence, according to the bank, also include disappointing artificial intelligence capacity or progress in adoption.

Modern Massachusetts Institute of Technology report I found that although the great trend towards adopting artificial intelligence in the world of corporate world, less than one in ten experimental programs for artificial intelligence have already made real gains in revenue. The report caused investors to the extent that artificial intelligence shares immediately retreated after the main headlines in August.

Last month, the Statistics Office showed that the average artificial intelligence rate by large companies was so Slight decrease.

However, executive officials continue to reassure investors that the demand for artificial intelligence is increasing quickly as technology finds its way to more and more areas of life. The demand for computing artificial intelligence is highLargely“In the past six months, according to the comments of the CEO of Nvidia Jensen Huang on Wednesday.

But if the technology giants are wrong, and it ended with the scenario of the risk set by the Bank of England, the bank warned of the possibility of a sudden and sharp correction, “which negatively affects the cost and extent of financing for families and companies.”

The United States has the reasons why it is afraid of this. According to recent reports, the madness of spending on artificial intelligence not only supports the American stock market, but also raises Real economy. according to Economist at Harvard University James ForemanAccording to US accounts, GDP growth in the United States during the first half of this year was almost fully driven by investments in data centers and other information processing technologies.