ECB economists call a correction in AI stocks likely

Economists at the European Central Bank have written in a blog post that a correction in AI-driven equity valuations is likely — regardless of whether current prices reflect economic reality or not. That formulation is the core of the argument.

They ground it in three historical cases: the railway mania of the 1840s, the electrification and radio boom of the 1920s, and the internet bubble of the late 1990s. In all three the underlying technology was real, reshaped entire industries and raised productivity. And in all three, prices outran actual earnings growth.

As their measure they cite the cyclically adjusted price-earnings ratio devised by Robert Shiller. It currently stands at around 41 — the second-highest reading in modern history, exceeded only at the dot-com peak in 1999 at 44 to 45.

For Europe the authors quantify the contagion risk: roughly 440 billion euros of European exposure to US technology stocks. A correction would therefore not stay an American event but would touch euro area financial stability — through funds, insurers and pension assets.

The format matters for interpretation. This is a blog post by staff economists that explicitly does not represent the official position of the ECB or the Eurosystem. That is not a footnote: central banks use this format to voice warnings without sending monetary policy signals.

The timing is striking. The warning lands in the same weeks in which Anthropic is preparing a listing at a two trillion dollar valuation. The two are not in contradiction but the same observation from opposite sides: valuations are high because expectations are.