Fears of AI Bubble Linger Among Central Bankers

As the artificial intelligence boom grows, so do fears that it’s a bubble waiting to burst.

Tech valuations supposedly are not yet at levels consistent with historical bubbles.

The tech-heavy Nasdaq Composite surged to a record high at one-point last week, with AMD’s 11% jump leading the way.

AMD is up more than 40% this week following the announcement of its multibillion-dollar deal with OpenAI—the latest development to ignite the rally, Callum Keown reported for Barron’s Daily.

But those gains are also fueling concerns that a bubble is forming.

The Bank of England (BOE) warned that the risk of a sharp market correction has increased, citing stretched valuations, particularly among companies focused on AI.

Stock markets are vulnerable if AI optimism fades, it added.

The BOE isn’t alone. International Monetary Fund Managing Director Kristalina Georgieva echoed similar concerns in a speech in Washington.

Her comments followed Federal Reserve Chair Jerome Powell’s remarks last month that stocks are “fairly highly valued.”

However, Goldman Sachs offered a counterargument. Peter Oppenheimer, the bank’s chief global equity strategist, said tech valuations were not yet at levels consistent with historical bubbles.

Crucially, he added that the rally is supported by powerful and sustained profit growth rather than excessive speculation.

Nvidia CEO Jensen Huang is, of course, also in the “no bubble” camp. He said that AI demand has grown “substantially” in the past six months.

Still, the argument was finely balanced before JPMorgan CEO Jamie Dimon weighed in. The bank’s longtime leader told the BBC he was far more worried than others about a serious stock market correction—but didn’t sound too downbeat on AI.