BIS warns AI stock frenzy could trigger market slump

The Bank for International Settlements (BIS), often called the central bank for central banks, has issued a stark warning that the artificial-intelligence investment frenzy has inflated stock market valuations to levels that could trigger a sharp slump, with potential spillover effects on the broader economy.

In its annual report, the BIS highlighted rich equity valuations, investor complacency, and the rise of circular financing—where funds flow between AI-related companies and investors—as clear warning signs. The report also pointed to potential knock-on effects in credit markets, as a sudden reversal in risk appetite could lead to tighter financial conditions. For equities traders, this signals that the AI-driven rally, which has propelled major indices to record highs, may be vulnerable to a correction. Live stock prices and charts on NowPrice show how the market is reacting to these concerns.

The BIS report adds a powerful institutional voice to growing unease about AI stock valuations. Traders should watch for increased volatility in tech and AI-related names, as well as any shifts in credit spreads that could indicate stress. Key data releases, such as upcoming earnings from major AI players and central bank policy decisions, will be critical in determining whether the market can sustain its momentum or faces a deeper pullback.