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The International Monetary Fund (IMF) has warned that the current surge in artificial intelligence (AI) investments in the United States may mirror the dot-com boom of the late 1990s, potentially ending in a market correction, but said it was unlikely to trigger a crisis that would threaten the wider U.S. or global economy.
Speaking to Reuters ahead of the IMF and World Bank annual meetings in Washington, the Fund’s chief economist Pierre-Olivier Gourinchas drew parallels between the internet bubble of 1999 and today’s AI enthusiasm. He said both eras have seen soaring valuations, surging capital-gains wealth, and stronger consumption that added to inflationary pressures.
“Then, as now, the promise of a new, transformative technology ultimately may not meet market expectations in the near term and trigger a crash in stock valuations,” Gourinchas said. “But this is not financed by debt, and that means that if there is a market correction, some shareholders, some equity holders, may lose out. It doesn’t necessarily transmit to the broader financial system and create impairments in the banking system or in the financial system more broadly.”
Gourinchas noted that the current AI wave is largely being driven by cash-rich technology companies, not by excessive borrowing. Unlike the housing-market bubble that led to the 2008 global financial crisis, the AI boom lacks the leverage that amplifies systemic risk.
Tech giants have poured hundreds of billions of dollars into AI chips, data centers, and computing power, betting that generative AI will deliver significant productivity gains. Yet, Gourinchas cautioned that those benefits have not yet materialized at the macroeconomic level — much like the early internet era, when lofty valuations were not matched by revenues, leading to the dot-com crash of 2000 and a mild U.S. recession in 2001.
According to IMF estimates, AI-related investments have risen by less than 0.4% of U.S. GDP since 2022, compared with a 1.2% increase in investment during the dot-com boom between 1995 and 2000. While smaller in scale, the IMF warned that a sharp market correction could still cause a shift in investor sentiment, leading to risk repricing and stress among non-bank financial institutions.
“But it’s not a direct link. We’re not seeing enormous links from the debt channel,” Gourinchas added.
In its latest World Economic Outlook, the IMF cited the U.S. AI investment surge as one of the key factors supporting global growth in 2025, alongside lower-than-expected tariffs and easier financial conditions aided by dollar depreciation. However, Gourinchas cautioned that the wave of AI-driven capital spending is adding to demand and inflationary pressures without yet producing equivalent productivity gains.
The IMF’s warning suggests that while the AI revolution may be reshaping markets and expectations, it has yet to prove itself as a lasting driver of economic output — leaving investors, policymakers, and companies navigating familiar terrain between technological optimism and speculative excess.
Speaking to Reuters ahead of the IMF and World Bank annual meetings in Washington, the Fund’s chief economist Pierre-Olivier Gourinchas drew parallels between the internet bubble of 1999 and today’s AI enthusiasm. He said both eras have seen soaring valuations, surging capital-gains wealth, and stronger consumption that added to inflationary pressures.
“Then, as now, the promise of a new, transformative technology ultimately may not meet market expectations in the near term and trigger a crash in stock valuations,” Gourinchas said. “But this is not financed by debt, and that means that if there is a market correction, some shareholders, some equity holders, may lose out. It doesn’t necessarily transmit to the broader financial system and create impairments in the banking system or in the financial system more broadly.”
Gourinchas noted that the current AI wave is largely being driven by cash-rich technology companies, not by excessive borrowing. Unlike the housing-market bubble that led to the 2008 global financial crisis, the AI boom lacks the leverage that amplifies systemic risk.
Tech giants have poured hundreds of billions of dollars into AI chips, data centers, and computing power, betting that generative AI will deliver significant productivity gains. Yet, Gourinchas cautioned that those benefits have not yet materialized at the macroeconomic level — much like the early internet era, when lofty valuations were not matched by revenues, leading to the dot-com crash of 2000 and a mild U.S. recession in 2001.
According to IMF estimates, AI-related investments have risen by less than 0.4% of U.S. GDP since 2022, compared with a 1.2% increase in investment during the dot-com boom between 1995 and 2000. While smaller in scale, the IMF warned that a sharp market correction could still cause a shift in investor sentiment, leading to risk repricing and stress among non-bank financial institutions.
“But it’s not a direct link. We’re not seeing enormous links from the debt channel,” Gourinchas added.
In its latest World Economic Outlook, the IMF cited the U.S. AI investment surge as one of the key factors supporting global growth in 2025, alongside lower-than-expected tariffs and easier financial conditions aided by dollar depreciation. However, Gourinchas cautioned that the wave of AI-driven capital spending is adding to demand and inflationary pressures without yet producing equivalent productivity gains.
The IMF’s warning suggests that while the AI revolution may be reshaping markets and expectations, it has yet to prove itself as a lasting driver of economic output — leaving investors, policymakers, and companies navigating familiar terrain between technological optimism and speculative excess.
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