The Reserve Bank of Australia has warned that a sharp drop in artificial intelligence stocks could weigh on the domestic economy. According to an RBA paper, Australian households hold approximately 5.4 to 5.5 percent of their financial wealth in AI-related stocks, with nearly 90 percent of that exposure in foreign markets, mainly the United States. In a scenario of a permanent 20 percent decline in AI stocks, household consumption could fall by about 0.7 percent in the long run, and potentially up to 2.4 percent if the selloff spread to broader equity markets. The RBA Financial Stability Review also flagged circular financing practices in the sector, where companies invest in each other, making demand appear stronger than it actually is.
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