The International Monetary Fund (IMF) has cautioned that inflated valuations and rising debt levels in the AI sector could lead to a significant market correction, jeopardizing global financial stability. In its Global Financial Stability Report, the IMF identified this potential crash as one of three major risks, alongside increasing government borrowing costs and the threat of cyber-attacks.
The IMF emphasized the interconnectedness of major AI companies and the high levels of leverage that could exacerbate market volatility. It noted that a downturn in AI stocks could trigger forced selling and increased equity volatility, particularly affecting Asian markets and investors with ties to the US.