JP Morgan’s CEO, Jamie Dimon, has voiced apprehension regarding a market surge driven by AI, cautioning that it might parallel the dot-com collapse. Addressing an audience in Bournemouth, where the bank revealed a £350 million investment in its local campus, Dimon remarked that he is “far more concerned than others” about the likelihood of a notable market correction within the next six months to two years. “AI is legitimate and will yield returns overall,” Dimon conveyed to the BBC, “but the majority of participants won’t fare well. A portion of the investments being made will likely be squandered.”
This warning resonates with a recent notice from the Bank of England’s Financial Policy Committee, which pointed out inflated valuations in AI-centric tech firms. Officials observed that the current market concentration, where 30% of the S&P 500 is owned by its five largest companies, marks the highest level in 50 years, drawing similarities to the dot-com bubble’s apex in 2000.
The swift rise in AI shares has persisted in spurring mergers and investments. OpenAI is engaged in around $1 trillion worth of collaborations with Oracle, AMD, and CoreWeave, while Microsoft has committed £22 billion for AI infrastructure in the UK. Analysts at Barclays indicate that “FOMO (fear of missing out) is fully in play,” but warn that the “AI spending frenzy and circular funding” are amplifying bubble fears.
Lale Akoner, a global market analyst at eToro, informed City AM: “Should sentiment shift, an AI-induced sell-off could reverberate through global markets. Given the significant weighting of these stocks in major indices, a correction could impact not only tech but also portfolios, funding conditions, and confidence more broadly.”
Dimon also pointed out wider economic and geopolitical threats, remarking that the US has become “less dependable” as a global ally, with increasing unpredictability regarding fiscal policy and central bank autonomy contributing to market volatility.
Nevertheless, some economists propose that a market pullback might not be entirely detrimental. Joe Maher from Capital Economics observed that a decline in AI valuations could reduce the disparity between UK and US markets, while Shore Capital’s Martin O’Sullivan contended that a temporary reset would not diminish AI’s long-term growth potential as its adoption and monetization progress.
These alerts arrive as Chancellor Rachel Reeves makes a £30 billion investment in US tech to spur UK growth, encompassing AI and cloud infrastructure initiatives. If the bubble collapses, ambitious government initiatives and corporate funding could experience substantial upheaval.
