The boss of JP Morgan has joined warnings that an AI-driven stock market bubble could be about to burst.
Jamie Dimon said he was ‘far more worried than others’ about the risk of a serious correction – suggesting it could even happen in the next six months.
The grim message, in an interview with the BBC, came after the Bank of England and IMF both raised concerns about inflated valuations.
They made comparisons to the Dotcom bubble, suggesting any sudden shift in sentiment could hammer global growth.
Mr Dimon, who runs the US’s biggest bank, said a ‘lot of things’ were creating an atmosphere of uncertainty.
Jamie Dimon said he was ‘far more worried than others’ about the risk of a serious correction – suggesting it could even happen in the next six months
He pointed to risk factors including geopolitical volatility, fiscal strains on governments, and a remilitarisation drive.
‘All these things cause a lot of issues that we don’t know how to answer,’ he said.
‘So I say the level of uncertainty should be higher in most people’s minds than what I would call normal.’
He suggested a correction could happen within the next six months to two years. ‘I am far more worried about that than others,’ he said.
Much of the surge in tech stock values has been driven by expectations that AI will revolutionise the economy and society.
But Mr Dimon said it was ‘probable’ that some investors would lose money.
‘The way I look at it is AI is real, AI in total will pay off,’ he said.
‘Just like cars in total paid off, and TVs in total paid off, but most people involved in them didn’t do well.’
He added some of the money being invested in AI would ‘probably be lost’.
Yesterday the Bank of England’s Financial Policy Committee (FPC) drew comparisons between the current stock market and the mania for so-called ‘Dotcom’ stocks 25 years ago.
And they said share valuations ‘appear stretched, particularly for technology companies focused on artificial intelligence’.
The Bank said the trend left equity markets ‘particularly exposed should expectations around the impact of AI become less optimistic’.
AI-focused tech stocks are concentrated in US markets but many investors around the world have piled in and could be exposed to any downturn.
Bank officials fear stock markets across the globe could also be caught up in any shock, which could also see lending seize up.
Meanwhile, the head of the International Monetary Fund Kristalina Georgieva said in a speech yesterday: ‘Today’s valuations are heading toward levels we saw during the bullishness about the internet 25 years ago.
‘If a sharp correction were to occur, tighter financial conditions could drag down world growth, expose vulnerabilities, and make life especially tough for developing countries.’
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Is the AI bubble about to burst? JP Morgan boss joins dire warnings from BoE and IMF about risk of stock market crunch