The Monetary Authority of Singapore (MAS) has issued a warning about the high valuations in the technology sector, which it says could lead to a significant market correction. In its annual Financial Stability Assessment report, MAS highlighted that the technology and artificial intelligence sectors are particularly overvalued. The report cautioned that if optimism about future returns from AI investments wanes, it could trigger a broader market correction and increase defaults in the private lending market. MAS noted that recent stock market gains have been largely driven by AI-related investments, raising investor exposure to the tech sector. The report also pointed out that some large tech companies are relying on new private financing structures, which could increase revenue pressure. The divergence between stock market valuations and economic growth risks suggests that a market shock could result in disorderly adjustments.