AI bubble fears emerge as top market risk, BofA survey shows

[AI - Artificial Intelligence digital concept. innovations and technology]
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Bank of America’s October Global Fund Manager Survey revealed that concerns over a potential artificial intelligence (AI) bubble have surged to the forefront of investor sentiment.

For the first time in the survey’s history, fund managers identified an AI bubble as the single largest market tail risk, with 33% of respondents citing it as their top concern — a sharp increase from just 11% in September.

The findings underscore how quickly investor enthusiasm toward AI-linked stocks has shifted toward caution. When asked whether AI stocks are currently in bubble territory, 54% of respondents said yes, compared with 38% who said no. That marks a notable jump from the prior month, when only 41% believed valuations had reached bubble levels.

The rapid rise in perceived risk reflects growing unease over stretched valuations in the tech sector, even as enthusiasm for AI-driven innovation continues to dominate market narratives. Investors appear increasingly wary that momentum-driven gains could unwind just as quickly as they built up.

Aside from an AI bubble the other tail risks fund managers are concerned over include a second waive of inflation, the Fed losing independence & a US dollar debasement, a disorderly rise in bond yields, geopolitical conflicts, and a trade war that triggers a recession.

See the below chart outlined by BofA:
[BofA Research]
Market tail risks (BofA Research)

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