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The Bank of England has issued its strongest warning to date, cautioning that global financial markets face a heightened risk of a sharp correction due to potential negative sentiment surrounding AI. Citing similarities to the dotcom bubble, the BoE noted that US stock valuations, particularly for AI-focused companies, are reaching concerning levels of concentration and high price-to-earnings ratios. This could lead to significant spillover risks for Britain's financial system if investor expectations about AI's impact become less optimistic.

Prepared by Christopher Adams and reviewed by editorial team.