Company stock valuations in the US are close to being the most stretched since the “dot-com bubble” and in the UK since the 2008 financial crisis, the Bank of England has warned.
Share prices, particularly for technology companies focused on artificial intelligence (AI), remain “materially stretched” and at risk of a “sharp correction”.
The Bank’s latest Financial Stability Report (FSR) found that risks to stability have increased in 2025.
Our Financial Stability Report looks at the risks in our financial system and what we are doing to ensure households and businesses can rely on it.
— Bank of England (@bankofengland) December 2, 2025
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Investor concerns about the looming threat of an AI bubble bursting have shaken up the global financial markets in recent weeks.
It follows a period where big tech and AI firms have been spending heavily and benefited from a boom in the valuation of their business.
Despite the growing risks, the UK banking system remains sturdy enough to support households and businesses even if economic conditions got substantially worse, the Bank concluded.
