Tech firms are vulnerable to the risk that soaring valuations will drop sharply amid potentially “disappointing” progress around artificial intelligence (AI), the Bank of England has warned.

The risk of a “sharp correction” in the financial markets has increased, the Bank’s Financial Policy Committee (FPC) said.

The minutes of the FPC’s latest meeting read: “On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence.

“This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.”

It said there was a risk that “disappointing” progress on AI capability or adoption, or increased competiti

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