Metro: Is the AI bubble about to burst after Bank of England warns of dot-com crash repeat?
Source:
- 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’.
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The world has entered the age of artificial intelligence (AI), and this exciting new technology is already changing the face of society in an ever-growing number of ways. It’s influencing a plethora of industries and sectors, from healthcare and education to finance and urban planning. This guide explores AI’s impact on three of the core pillars of life: business, education, and sustainability.
AI in Business: Unlocking Unprecedented Opportunities
In the world of business, the number of uses of AI is growing by the day. Whether it’s in sales, marketing, customer relations, operational optimization, cybersecurity, data management, or some other aspect of organizational life, there are so many ways this technology can unlock new opportunities or expedite existing processes.
Take data as an example. Many businesses now collect and use large amounts of data to inform their decisions in areas like product development or marketing strategy. But they have, up to now, been limited in how they can structure, visualize, and analyze their data. AI changes all that, as it can dig into vast databases with ease, extracting insights to drive actionable decisions in no time.
AI also bridges gaps in communications. It has the power to speak in most major languages, translating audio or written text with astonishing accuracy in an instant. In a globalized world, where many businesses buy and sell with partners, suppliers, investors, and other stakeholders from other nations, AI can help them communicate and exchange information more easily and reliably.
AI in Education: Democratizing and Accelerating the Learning Process
In the educational sector, AI is solving problems that have plagued this industry for generations and transforming the ways in which students learn and teachers teach. It can be used, for example, to personalize a student’s learning plan or adapt content to align with each learner’s favored learning style, making it easier for them to soak up and retain information and skills.
AI’s generative capabilities are also proving useful in the education sector. Teachers, for example, can turn to generative AI models to create lesson plans or supplementary content to support their courses, such as tables, charts, infographics, and images. This all helps to make the learning experience more diverse, dynamic, and engaging for every kind of learner.
On a broader level, there’s clear potential for AI to democratize education across the globe, making learning more accessible to all. That includes those in developing nations who may normally lack opportunities to gain knowledge and skills to achieve their ambitions. If harnessed correctly and responsibly, this technology could elevate education to whole new heights.
AI in Sustainability: Smarter Cities and Next-Level Efficiency
Sustainability is one of the sticking points when talking about AI, as many critics of the technology point to the fact that it involves huge amounts of energy and relies heavily on large and costly data centers to operate. At the same time, AI could also solve many of the sustainability crises facing the world today, uncovering solutions and innovations that may have previously taken decades to develop.
It’s already proving its value in this domain. For instance, DeepMind developed an AI system that was actually able to optimize data center energy efficiency, cutting the amount of energy used to cool data center hardware by a whopping 40% and improving energy efficiency in certain centers by 15%. That’s just one example, and it’s only the start of what AI could do from an environmental perspective.
This tech is also making cities smarter, more efficient, and more pleasant in which to live through AI-powered navigation aids or traffic redistribution systems. It also holds potential for future urban planning, city development, and infrastructure construction, provided the correct systems and frameworks can be established to make the best use of AI’s advantages.
The Ethical Challenges and Risks of AI
Despite its almost countless advantages and possible applications, AI is not without its flaws. This technology brings challenges and risks to go along with its opportunities, and five leading examples include:
- Bias: Algorithmic bias is an issue that has already presented itself during the relatively brief existence of AI so far. Some systems, for example, have issued responses or generated content that could be classified as discriminatory or prejudiced, due to the training data they were given.
- Privacy: There are fears among populations and analysts about the amount of data being fed into AI systems and how such data could be misused, potentially violating people’s rights of privacy and falling foul of data privacy regulations, such as GDPR.
- Misuse: Like so many game-changing technologies, AI has the potential to be used for both benevolent and malicious purposes. It may be used to spread misinformation and “fake news,” influence public opinion, or even in cyber-attacks, for instance.
- Over-reliance: AI is so powerful, with the capacity to carry out tasks with remarkable precision and speed, that it will be tempting for organizations to integrate it into many of their workflows and decision-making processes. But AI cannot be treated as a substitute for human judgment.
- Sustainability: There are also fears about the energy costs associated with AI and the data centers needed to power it, plus the fact that some elements of the burgeoning AI industry may exploit workers in poorer nations worldwide.
Solving These Challenges: Regulation and Responsible Use of AI
With the right approach, it is possible to solve all the above challenges, and more, making AI the most valuable and beneficial new technology the world has seen since the advent of the internet. This will require a two-pronged strategy focusing on both regulation and responsible usage.
Europe is already leading the way in the first aspect. It has introduced the AI Act – a world-first regulatory framework related to artificial intelligence, laying out how it should be used to drive innovation without infringing on the fundamental rights of workers and the larger public.
Educational institutions like the OPIT – Open Institute of Technology are also leading the way in the second aspect, educating people around the world on how to work with AI in a responsible, ethical way, through programs like the MSc in Responsible Artificial Intelligence.
By establishing rules and regulations about AI’s usage and educating the tech leaders of tomorrow in how to work with AI in a fair and responsible way, the future is bright for this exciting and extraordinary new technology.
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