AI frenzy hides underlying risks as the European Central Bank warns of a potential tech stock correction, posing challenges to global financial stability

⑴ The European Central Bank has issued a warning in a blog post, stating that the current frenzy in the US tech stock market could face a significant correction. With limited fiscal and monetary policy buffers, any potential economic shock will be difficult to mitigate effectively.⑵ Investors continue to flock to the tech sector, betting that artificial intelligence will fundamentally reshape the global economic landscape. The valuations of leading tech companies have deviated sharply from historical averages, and market sentiment is at an extremely exuberant level.⑶ The blog references past economic research on technological revolutions, pointing out that there is a high risk of market correction in current stock valuations. Even if artificial intelligence technology ultimately succeeds and corporate profits grow, share prices may still decline if they fail to meet the excessively optimistic expectations for profit growth.⑷ The article further analyzes that psychological trends also signal an imminent adjustment. Overly optimistic investors often drive share prices to highs disconnected from fundamentals, and once optimism fades, the decline may be more severe than in a rational scenario.⑸ For Europe, a correction in the US market would pose a tangible financial stability risk. European households have a risk exposure of 440 billion euros to shares in the US "Magnificent Seven" tech stocks, with pension funds and insurance companies holding a similar scale of exposure. The potential chain reaction should not be underestimated.