Nick Edser
Business reporter
Image source, Getty ImagesStock markets seen on 14 September in Tokyo, as tech shares in Asia and Europe fall following calls for a slowdown in AI development
AI-related stocks have been on a roll for a while but concerns that the technology is becoming too powerful are now hitting the sector, suggests Russ Mould, investment director at AJ Bell.
“It looks like AI’s strengths could backfire,” he said. “There are growing fears that AI is advancing at an extraordinary pace and there need to be greater safeguards and controls in place.”
The huge wave of investment seen in AI and AI-related companies over the past few years has come with the expectation that the sector will continue to grow and be profitable.
But some have argued that the valuations of AI companies have got out of hand, raising the prospect of a repeat of the dotcom boom and bust that was seen among early internet-based firms in the late 1990s.
Sir Jon Cunliffe, a former deputy governor for financial stability at the Bank of England, warns any disruption to expectations over AI profitability could lead to a “wide correction” – that is, a big fall – in the values of the companies.
Cunliffe told the BBC’s Today programme that past technological revolutions – such as canals, railways, electrification – which boosted the economy in the long run were “also accompanied by investment booms, and not all of the investment was justified by the future returns, and that’s the possibility here”.
