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Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI
- lowlevel 1y ago…about time the bullshit walks.
- boguscoder 1y agoAny non paywalled links, please?
- WithinReason 1y agoI don't see a paywall
- gainda 1y agohttps://archive.ph/BNUzu https://archive.ph/BNUzu
- ratelimitsteve 1y agoyou can almost always go to archive.is or one of the other mirrors and paste in the original link. it will get you past the paywall and also give you a link that will get others past the paywall. it seems to be a monkey-see monkey-do part of the hackernews microculture that if a link is paywalled a commenter will throw up the archive link
- sampton 1y agoA lot investment is banking on agi. There’s no sign agi is going to happen this decade.
- hackernewds 1y agoThat's what people have said about technologies in every decade, Sam
- estomagordo 1y agoWhat's a sign it's going to happen ever?
- NoMoreNicksLeft 1y agoHumans. There are arrangements of atoms that if constructed and activated, act perfectly like human intelligence. Because they are human intelligence. Human intelligence must be deterministic, any other conclusion is equivalent to the claim that there is some sort of "soul" for lack of better term. If human intelligence is deterministic, then it can be written in software. Thus, if we continue to strive to design/create/invent such, it is inevitable that eventually it must happen. Failures to date can be attributed to various factors, but the gist is that we haven't yet identified the principles of intelligent software. My guess is that we need less than 5 million years further development time even in a worst-case scenario. With luck and proper investment, we can get it down well below the 1 million year mark.
- SideburnsOfDoom 1y ago> Human intelligence must be deterministic, any other conclusion is equivalent to the claim that there is some sort of "soul" for lack of better term. No, not all processes follow deterministic Newtonian mechanics. It could also be random, unpredictable at times. Are the there random processes in the human brain? Yes, there are random quantum processes in every atom, and there are atoms in the brain. Yes, this is no less materialistic: Humans are still proof that either you believe in souls or such, or that human level intelligence can be made from material atoms. But it's not deterministic. But also, LLMs are not anywhere close to becoming human level intelligence.
- NoMoreNicksLeft 1y ago>It could also be random, unpredictable at times. It isn't. But if it were, we can also write that into the algorithm. >But also, LLMs are not anywhere close to becoming human level intelligence. They're no farther than about 5 million years distant.
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- Delphiza 1y agoAlso reported in the Guardian. https://www.theguardian.com/business/2025/oct/08/bank-of-england-warns-of-growing-risk-that-ai-bubble-could-burst https://www.theguardian.com/business/2025/oct/08/bank-of-eng... For non-brits, Bank of England the UKs central bank and is a lot like the US Fed. Their comments carry a lot of weight and do impact government policy. Not enough central banks were making comments about the sub-prime bubble that led to the 2008 crisis. Getting warnings about a possible AI bubble by a central bank is both significant and, in performing the functions of monetary and financial stability for a country, the prudent thing to do.
- whimsicalism 1y agoThe mistake central banks made in 2007-2009* was keeping monetary policy far too tight for far too long, for no real discernable reason. Offering commentary on which particular sectors they feel are a 'bubble' is outside their purview and not particularly productive IMO, the state is not very good at picking winners. *edited to 2007
- NewJazz 1y agoSorry you think the government wasn't pumping the 2006 economy enough?
- whimsicalism 1y ago2006 was too early, fair enough. But we were way too tight by late 2007 at least. We should never have let AD fall as much as it did.
- bgwalter 1y agoI like that the Bank of England spells out the "sudden correction" this time. In 1996 Fed Chair Alan Greenspan warned about irrational exuberance, in 1999 he warned Congress about "the possibility that the recent performance of the equity markets will have difficulty in being sustained". The crash came in 2000. The warning seems to have gone unnoticed. AMD just behaves exactly like Juniper in 1999.
- Pxtl 1y agoSeems obvious. AI is useful. But it's not trillion-dollars useful, and it probably won't be.
- whimsicalism 1y agoWhy is that obvious? Even with effectively complete stagnation and just existing technology + limited RLVR, I can see how this could be trillion-dollars level useful.
- Delphiza 1y agoIt is the financial risk that is obvious. The big players are struggling to show meaningful revenue from the investment. Because the investment is so high, the revenue numbers need to be equally high, and growing fast. The 'correction' is when (ok, if) the markets realise that the returns aren't there. The worldwide risk is that AI-led growth has been a large chunk of the US stock market growth. If it 'corrects' US growth disappears overnight and takes everyone down with it. It is not an issue about the usefulness of AI, but the returns on investment and the market shocks caused by such large sums of money sloshing around one market.
- whimsicalism 1y agoI think we have only scratched the surface of what we can do with the existing technology. A much more present risk from stagnation IMO is that if we stagnate, it is almost certain that the value of the tech will not be able to be enclosed /captured by its creators.
- Pxtl 1y agoImho it will take off in animation/illustration as soon as Adobe (or some competitor) figures out how to make good tooling for artists. Not for idiot wantrepeneurs who want to dump fully-generated-slop onto Amazon, but so that a person can draw rough pencil sketches and storyboards and reference character sheets and get back proper illustrations. Basically, don't replace the penciler but replace the inker and the colourist (and, in animation, the in-betweener). That's more of a UI problem than a limitation in Diffusion tech. That's a customer who'll pay, it might be worth a lot. But a $trillion per year?
- deleted 1y ago[deleted]
- ratelimitsteve 1y ago[flagged]
- ratelimitsteve 1y agothis is how capitalism does things. no one wants to overinvest but no one wants to be left behind and everyone is sure that either there's not gonna be a pop or they can sell before it pops. it has been educational to see how quickly the financier class has moved when they saw an opportunity to abandon labor entirely, though. that's worth remembering when they talk about how this system is the best one for everyone.
- rkomorn 1y agoZero labor cost is the dream!
- nobleach 1y agoTo whom does one sell when they've deleted their workforce? Seeing company after company add to unemployed workers shows they have no forward-thinking ecomonomists advising them. Further, AI for all of its positive potential is NOT going to be free... or even "cheap" once the investors dry up.
- rkomorn 1y agoI never said it was a smart dream. It all seems somewhat (at best) shortsighted to me. I'm pretty sure they all see the it as someone else's problem to solve.
- nobleach 1y agoyeah.... always someone else's problem to solve. Just like a pyramid scheme.
- ratelimitsteve 1y agoWhy would one need to sell anything to anyone after one acquires the first machine that can automatically build the others? Capitalist economies kinda suffer from Goodhart's law: money is a better metric for success in a capitalist economy than most metrics are but it's important to remember that money is only a token to stand in for work and materials (I'd argue that the value of materials themselves are really just the work of retrieving them but that's a different argument). Having money in reality is just having work and materials in potentia. So what happens when the materials can do all the labor? Workers are cut out from the loop of owners gathering more things to own, and this does not hamper the owners at all. Adding AGI to capitalism isn't going to bring about capitalism with AGI in it like adding salt to water. Adding AGI to capitalism is going to act much more like adding sodium to water. I don't see it happening this generation, which is I guess nice, but I'm not looking forward to the transition between what we're doing now and Star Trek post-scarcity because I have the oddest feeling that if you look closely at any society that has done that transition there's likely to be an extreme genetic bottleneck, if I may be vague about it for pleasantries' sake.
- whimsicalism 1y agoAI is a risk. The thing we know is going to bite us in the butt is our continued massive sovereign debt burden and lack of any political will whatsoever to either increase taxes or reduce spending. The dollar is not going to do well this century and creditors confidence is already starting to decline. In fact, the further we go into debt - the more we are implicitly betting our society on an AI hail mary.
- monero-xmr 1y agoThere is only 1 solution to the global debt crisis and thats inflating the currency. They did it after WW2 and they will have to do it now. There is no other option. They can do it sneaky through fake measures of inflation, keeping a lid on cost of living adjustments, but ultimately they soak bond holders and standard of living. You see it everywhere in things they can’t inflate. The price of houses and gold most obviously, but you see it in commodities that can’t expand production quickly as well. The solution is to buy assets of course.
- whimsicalism 1y agoMonetizing a debt of this magnitude would be disastrous, but agreed this appears to be the path we are going on by default - given that we are consistently above the inflation mandate yet still lowering rates. It's no longer the early 20th, there are other competitive & well-run jurisdictions for creditors to dump their money in if they lose faith in the US.
- disgruntledphd2 1y ago> It's no longer the early 20th, there are other competitive & well-run jurisdictions for creditors to dump their money in if they lose faith in the US. Where, pray tell are these competitive and well-run jurisdictions? China has capital controls so that probably won't work. The EU might work if they ever get their sh*t together and centralise their bonds and markets, otherwise no. Like, I too believe that the US is on an unsustainable path, but I just don't see where all that money is gonna go (specifically referring to the foreign investment in the US companies/markets here).
- fasteo 1y agoFrom the actual report[1] >>> Despite persistent material uncertainty around the global macroeconomic outlook, risky asset valuations have increased and credit spreads have compressed. Measures of risk premia across many risky asset classes have tightened further since the last FPC meeting in June 2025. On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence (AI). This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic. Actually, the quoted 'sudden correction' is not referring specifically to AI, but the market in general [1] https://www.bankofengland.co.uk/financial-policy-committee-record/2025/october-2025 https://www.bankofengland.co.uk/financial-policy-committee-r...
- NewJazz 1y agoYes but I think they have noted ai/tech companies are particularly exposed/stretched despite second order effects likely to impact the whole market.
- 1vuio0pswjnm7 1y ago"Actually the quoted 'sudden correction' is not referring specifically to AI, but the market in general" As I read that quote it states that valuations "particularly" for AI companies "appear stretched" This suggests the "correction" will apply to those valuations in particular The report later refers specifically to these so-called "technology" companies "5: Equity market valuations had increased since Q2, to near all-time highs, partly driven by strong Q2 earnings of US _technology firms_. The price appreciation of the largest _technology firms_ this year had increased the concentration within US equity indices to record levels. The market share of the top 5 members of the S&P 500, at close to 30%, was higher than at any point in the past 50 years." "6: Equity valuations appeared stretched, particularly in backward-looking metrics in the US. For example, the earnings yield implied by the Cyclically-Adjusted Price-to-Earnings (CAPE) ratio was close to the lowest level in 25 years - comparable to the peak of the dot com bubble. ... Some _technology companies_ were trading at valuation ratios which implied high future earnings growth, and concentrations within US equity indices meant that any _AI-led_ price adjustment would have a high level of pass-through into the returns for investors exposed to the aggregate index." Given their "stretched" valuations according to this report, any "sudden correction" would apply to these so-called "technology" companies Aside from the instances where the report refers to overvalued "tecchnology" companies particularly, the parent comment is correct that the report does not refer to "AI" specifically Thus, ...
- j45 1y agoHave there been other stock categories/industries receiving similar flags in the past?
- throwacct 1y agoThis is fair. We're now evaluating open-source LLMs to develop our in-house solutions, adding them to our products and services. As soon as they released the models, the moat was, depending on the context, somewhat gone.
- kragen 1y agoWhich models have you found most valuable? Are they still worse than the proprietary ones?
- throwacct 1y agoWe're testing different models depending on the business case. Our initial tests using 3, 7, and 8B models are working fine. We're not using the big ones since our use cases don't demand them.
- lucasRW 1y agoIsn't it a self-fulfilling prophecy at that point ? I have been hearing so many "it's going to crash, sell" from all sorts of sources since mid-August...
- BenFranklin100 1y agoCurrent valuations are based on the belief genuine AGI is around the corner. It’s not. LLMs are an interesting technology with many use cases, but they can’t reason in the usual sense of the word and are a dead end for the type of AGI needed to justify current investments. It’s going to be a gruesome train wreck.
- johnny_canuck 1y agoScott Galloway had a podcast episode about this topic just over a week ago. https://www.youtube.com/watch?v=Oeepx2ZLrCA https://www.youtube.com/watch?v=Oeepx2ZLrCA I used to scoff at the idea of the AI-bubble (or any recently called-for tech bubble) being like the 90s given the way technology/the internet is now so integrated into our lives, but the way he spelled it out it does seem similar.
- whitehexagon 1y agoFor me the question is who is going to subscribe who hasnt already. And that is before we consider the next gen hardware that can run this stuff locally. But from what I see of the economy around me here, people just dont have the spare funds for LLM luxuries. It feels like 15+ years of wage deflation, and company streamlining, has removed what little spare spending power people had here. Not forgetting the inflation we have seen in the euro zone. Even if the bet is now an 'all in' on AGI, I see that more as an existential threat than an economic golden egg bailout.
- reaperducer 1y agoBut from what I see of the economy around me here, people just dont have the spare funds for LLM luxuries. If you have to pick between Disney+ for your kids and a chatbot subscription, it's a pretty easy choice. More and more people are making choices like that.
- whimsicalism 1y agofor the chatbot, right? can never tell on the orange site..
- dzhiurgis 1y agoIMO they can raise prices 10x and developers will happily continue paying.
- marak830 1y ago"...who is going to subscribe who hasnt already." I think there will be an increase in subscribers as people get more used to them. But there's probably also people like me who just dropped 2k on a new system to self host my own to customise the pipeline, and integrate it into my house without sending data offsite.
- whitehexagon 1y agoNice, what did you settle on? I'm playing with qwen3:32b on an Asahi M1 currently, and it does more than enough for me, but might be tempted if there is a bigger model within reach.
- octo888 1y agoWow position 140 on HN after about about 3 hours. Brutal lol
- PyWoody 1y agoTop ten on https://news.ycombinator.com/active https://news.ycombinator.com/active right now.
- marak830 1y agoI use https://hckrnews.com/ https://hckrnews.com/ so I can see the stories in chronological order. Makes the "front page" effect basically disappear.
- octo888 1y agoInteresting. Thanks!
- kasperni 1y agoI saw this comment the other day on Reddit, and I think it sums up the current state pretty well. > Last month my parents decided to invest their extra cash into “AI” by paying a broker to buy “the AI stocks” they keep hearing about on the news.