Bank of England warns AI boom could magnify a market selloff

The Bank of England is warning that the AI boom is becoming a broader financial-market risk, not just a bet on technology stocks. It says valuations tied to AI remain high while companies and investors are raising more debt to fund the infrastructure behind the boom, giving a disappointment over future AI profits more ways to travel through markets. A fall in those assets could be amplified by leverage—investing with borrowed money—which can force investors to sell quickly when prices drop. The bank says that could collide with vulnerabilities in sovereign-bond markets and elevated hedge-fund borrowing in UK government bonds, raising the risk of a sharper adjustment with consequences for global growth and UK borrowing costs.