Investors warned over AI bubble risks to pensions, ISAs and wider markets

The new year has started as 2025 ended with share prices booming amid warnings that rapid gains in technology stocks may reflect an "AI bubble", voices including the governor of the Bank of England and the head of Alphabet have said. Analysts say bubbles are hard to predict: Daniel Casali of Evelyn Partners warned you only know a bubble has happened after the event, while some commentators say investors may be paying too much for tech stocks on misplaced expectations about AI.

Others, including bankers at UBS, have been positive about AI and said further corporate spending on the technology could underpin gains for AI-linked shares. Experts caution that a collapse in AI valuations could be contagious. As Casali put it, "If the bubble is in AI then it does not stop there with the sell-off – all other boats will start to sink as well." A broader market fall could hit jobs, the banking sector and the wider economy, and investments held in ISAs and pensions could fall in value.

Dan Coatsworth of AJ Bell noted that US tech names make up a large chunk of global trackers, citing about 72% of the MSCI World index. Financial advisers in the piece urged long-term thinking. Helen Morrissey of Hargreaves Lansdown said pensions are long-term investments and warned that "snap decisions" can crystallise losses and make recovery harder; she also noted workplace pensions may automatically move savers into lower-risk lifestyling funds as retirement nears.

Key Topics

Business, Ai Bubble, Alphabet, Isas, Pensions, Msci World