Metro: Is the AI bubble about to burst after Bank of England warns of dot-com crash repeat?

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• Metro, published on October 09th, 2025

After ChatGPT came on the scene in 2022, the tech industry quickly began comparing the arrival of AI to the dawn of the internet in the 1990s.

Back then, dot-com whizzes were minting easy millions only for the bubble to burst in 2000 when interest rates were hiked. Investors sold off their holdings, companies went bust and people lost their jobs.

Now central bank officials are worried that the AI industry may see a similar boom and bust.

A record of the Financial Policy Committee’s October 2 meeting shows officials saying financial market evaluations of AI ‘appear stretched’.

‘This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic,’ they added.

AI-focused stocks are mainly in US markets but as so many investors across the world have bought into it, a fallout would be felt globally.

ChatGPT creator OpenAI, chip-maker Nvidia and cloud service firm Oracle are among the AI poster companies being priced big this year.

Earnings are ‘comparable to the peak of the dot-com bubble’, committee members said.

Factors like limited resources – think power-hungry data centres, utilities and software that companies are spending billions on – and the unpredictability of the world’s politics could lead to a drop in stock prices, called a ‘correction’.

In other words, the committee said, investors may be ignoring how risky AI technology is.

Metro spoke with nearly a dozen financial analysts, AI experts and stock researchers about whether AI will suffer a similar fate. There were mixed feelings.

‘Every bubble starts with a story people want to believe,’ says Dat Ngo, of the trading guide, Vetted Prop Firms.

‘In the late 90s, it was the internet. Today, it’s artificial intelligence. The parallels are hard to ignore: skyrocketing stock prices, endless hype and companies investing billions before fully proving their business models.

‘The Bank of England’s warning isn’t alarmist – it’s realistic. When too much capital chases the same dream, expectations outpace results and corrections follow.’

Dr Alessia Paccagnini, an associate Professor from the University College Dublin’s Michael Smurfit Graduate Business School, says that companies are spending £300billion annually on AI infrastructure, while shoppers are spending $12billion. That’s a big difference.

Tech firms listed in the US now represent 30% of New York’s stock index, S&P 500 Index, the highest proportion in 50 years.

‘As a worst-case scenario, if the bubble does burst, the immediate consequences would be severe – a sharp market correction could wipe trillions from stock valuations, hitting retirement accounts and pension funds hard,’ Dr Paccagnini adds.

‘In my opinion, we should be worried, but being prepared could help us avoid the worst outcomes.’

One reason a correction would be so bad is because of how tangled-up the AI world is, says George Sweeney, an investing expert at the personal finance website site Finder.

‘If it fails to meet the lofty expectations, we could see an almighty unravelling of the AI hype that spooks markets, leading to a serious correction,’ he says.

Despite scepticism, AI feels like it’s everywhere these days, from dog bowls and fridges to toothbrushes and bird feeders.

And it might continue that way for a while, even if not as enthusiastically as before, says Professor Filip Bialy, who specialises in computer science and AI ethics at the at Open Institute of Technology.

‘TAI hype – an overly optimistic view of the technological and economic potential of the current paradigm of AI – contributes to the growth of the bubble,’ he says.

‘However, the hype may end not with the burst of the bubble but rather with a more mature understanding of the technology.’

Some stock researchers worry that the AI boom could lose steam when the companies spending billions on the tech see profits dip.

The AI analytic company Qlik found that only one in 10 business say their AI initiatives are seeing sizeable returns.

Qlik’s chief strategy officer, James Fisher, says this doesn’t show that the hype for AI is bursting, ‘but how businesses look at AI is changing’.

• Metro

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