Bank of England warns AI stock bubble rivals 2000 dotcom peak (arstechnica.com)

The Bank of England warned that global markets may be flirting with an AI-fueled bubble that could prompt a sharp correction if investor sentiment shifts, calling current US stock valuations comparable on some measures to the dotcom peak. In its quarterly Financial Policy Committee report (from a meeting last week), the BoE said the "risk of a sharp market correction has increased" and flagged that AI-focused companies account for an unprecedented share of market value. The S&P 500 hit a record high, up 14% year-to-date, and roughly 30% of its valuation now comes from just five firms—Nvidia, Microsoft, Apple, Amazon and Meta—the most concentrated the index has been in 50 years. For the AI/ML community the warning matters because it highlights systemic and market-structure risks tied to rapid capital flows into AI bets: concentrated valuations can amplify volatility, and a sharp repricing could spill over into banks, pensions and broader UK financial stability (the BoE called those spillovers "material"). The signal is also a reminder that lofty valuations rest partly on expectations about future AI productivity and adoption—so technical progress, deployment timelines, and revenue realization will be closely watched by investors and regulators alike.