Risk of Global Financial Crisis with AI Bubble

Financial Crisis It is a constant concern in an increasingly interconnected world.

In this article, we will explore the significant risk of a new global financial crisis driven by an artificial intelligence (AI) bubble in the US.

We will discuss the key characteristics of this bubble, the lack of improvements in global governance since the last crisis, the valuation of AI stocks, and how the impacts of technology are not yet reflected in companies' financial results.

Finally, we will discuss concerns surrounding the sustainability of this growth in the AI sector.

Current Scenario of Potential Financial Crisis

The global financial market is at increasing risk of a financial bubble, driven by higher-than-expected valuations of company stocks artificial intelligence (AI) in the USA.

Recently, the BofA FMS He highlighted this issue as the biggest risk to the economy. It is crucial to watch for certain signs of overheating that indicate a potential bubble in the current market:

• Exponential valuations
• Disproportionate growth compared to real income.
• Intense speculation in AI investments

These signs indicate that lack of progress in global governance since the last financial crisis, amplifying the systemic threat to the financial market.

The absence of a robust and effective governance structure can leave economies vulnerable to global shocks.

Thus, the combination of overvalued AI stocks and weak governance sets the stage for a potential financial crisis.

In other words, while the market continues to grow unchecked, the future of the global economy remains uncertain and at risk.

Fundamental Elements of the Artificial Intelligence Bubble

The current surge in the valuation of artificial intelligence (AI) company stocks reveals typical characteristics of a financial bubble, where prices exceed real economic fundamentals.

The factors driving this bubble include intense speculation, the expectation of unrestricted exponential growth, and the lack of robust governance to protect investors from the risks involved.

These elements not only affect the US domestic market, but also present a potential danger of financial contagion at a global level, given the interconnectedness of financial markets.

Valuation and Speculative Behavior

A overvaluation The surge in shares of artificial intelligence (AI) companies has generated concern among financial market analysts.

The phenomenon is driven by speculative behavior typical of a bubble, in which investors, moved by fear of missing opportunities (FOMO), make thoughtless purchases based on unrealistic expectations of future profit.

This excessive enthusiasm continues to inflate market prices, often detached from the real fundamentals of companies.

According to a Nasdaq study, companies like Nvidia and Microsoft experienced strong increases in their stock prices, reflecting speculative sentiment.

Historical data shows that when investors act with excessive confidence and optimism, stock prices can reach unsustainable levels, eventually leading to an abrupt correction.

It is observed that global governance has not evolved since the last financial crisis, increasing the risk of a financial bubble similar to that experienced during the dot-com boom.

Research suggests that this current AI bubble This could be a reflection of past events, signaling the need for prudence and foresight among investors.

Regulation and Fragility of Global Governance

An in-depth analysis This reveals the fragility in global governance that has persisted since the last financial crisis of 2008. The absence of significant progress in the regulation of financial technologies. enhances Systemic vulnerability, especially as the artificial intelligence bubble grows in the US.

Experts point out that the governance of these technologies is misaligned with the needs of the current market.

This regulatory ineffectiveness is evident on multiple fronts, of which we can list the following examples:

• Insufficient regulation of big techs
• Lack of controls Effective internal leaders in fintech companies
• Resistance regulatory innovations

.

These flaws become more relevant Given the sharp increase in the value of AI company stocks, which is not supported by real returns, causing concern among investors.

This scenario is exacerbated by the lack of a robust and up-to-date global governance framework that keeps pace with the speed of technological change, as indicated by... complexity of the modern world.

Therefore, regulatory stagnation not only increases the risks of a new financial crisis but also challenges the very stability of global governance.

The gap between AI stock prices and corporate performance.

The growing disconnect between the stock prices of artificial intelligence companies and their financial results is alarming.

We observed a valuation beyond what is justified In the market, stock prices are being inflated by future expectations, without any real support from current figures.

The price increase is not aligned with the companies' current returns, creating a speculative bubble.

According to market reportsThe price-to-earnings ratio for these companies exceeds sustainable levels, placing investors at high risk.

Metric	Reality
Price/Profit	Above 100x

With global governance insufficient to mitigate the risks associated with this exacerbated growth, the market faces the possibility of an imminent financial crisis.

The expectation of future profits drives valuations; however, this does not change the fact that gains from AI have not yet been consolidated into robust financial data.

If measures are not taken to address this distortion, investors could suffer severe economic consequences, jeopardizing market stability.

Financial Crisis This is a warning that we should heed.

Analyzing the characteristics of the AI bubble and its implications for corporate results is essential to understanding the risks involved and ensuring sustainable growth in this rapidly evolving sector.