Soaring valuations of technology firms could drop sharply amid potentially “disappointing” progress around artificial intelligence (AI), the Bank of England has warned.Big US tech companies likeNvidia,GoogleandMicrosofthave all seen their share prices soar over the past year, driven by expectations that the adoption of AI technology will ramp up around the world.But the central bank’s financial policy committee (FPC) warned that the risk of a “sharp correction” in the financial markets has increased.The minutes of the FPC’s latest meeting read:On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence.This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.It said there was a risk that “disappointing” progress on AI capability or adoption, or increased competition, could drive valuations lower across the sector.“Material bottlenecks to AI progress” including across power, data, or commodity supply chains could also harm valuations, particularly for firms that are expected to benefit from greater AI investment, the committee said.