AI stocks: What if this time it really is different?

THE artificial intelligence revolution over the past two years has been a gift to investors. It gripped a clutch of winner-takes-all stocks and catapulted them higher, creating multitrillion-dollar companies and padding out portfolios.

With so much at stake, it is natural to wonder whether this will all end in tears. The echoes of the dotcom bust at the turn of this century are strong, and having so much riding on such a small clique of companies – Nvidia, Microsoft and the like – is a concern. A technological, geopolitical or regulatory slip-up could have devastating effects.

Last week, the European Central Bank added its voice to those urging caution, noting in its regular financial stability review that the “concentration among a few large firms raises concerns over the possibility of an AI-related asset price bubble”. That “b-word” is not one you generally want to see in such dry publications.