&imwidth=800&imheight=600&format=webp&quality=medium "IMF's warning on artificial intelligence: 'Bubble will burst like...'")
The International Monetary Fund (IMF) has predicted that, like the dot-com bust in the early 2000s, the United States' artificial intelligence investmentboom could prove to be just an economic bubble and could burst. Pierre-Olivier Gourinchas, the IMF's chief economist, said that the burst could crater the US or global economy.
Dot-com bubble vs AI bubble
He told Reuters that the dot-com-induced stock bubble of the 1990s is similar to the current AI boom. He said both eras increased stock valuations and capital gains wealth exponentially. This artificial gain in stocks fueled consumption and inflation. He said that the promise of AI-enabled transformation may not be fulfilled, triggering a crash of valuations.
"This is not financed by debt, and that means that if there is a market correction, some shareholders, some equity holders, may lose out,” Gourinchas said in Washington.
"But it doesn’t necessarily transmit to the broader financial system and create impairments in the banking system or in the financial system more broadly,” he added.
Tech firms have been pumping billions of dollars into developing AI chips, computing power, and other AI infrastructure, betting on the promise that the new technology will enable gains in efficiency and productivity.
Trending Stories
)
Ukrainian drone travels 2,500 km in 12 hours to attack oil refinery in Siberia, as CIA confirms 30-minute soldier lifespan
Bhagat Singh, Irom Sharmila, Sonam Wangchuk and more: How one empty stomach shook India | Longest hunger strikes
)
As Sonam Wangchuk's protest enters 20th day, his father's 1984 fast that brought Indira Gandhi to Leh returns to focus
&im=FitAndFill=(700,400))
How the S-400 tracks multiple targets at once
&im=FitAndFill=(700,400))
'Maintenance, training and missiles': Inside the true cost of operating an S-400 battery
)
‘If US attacks continue…’: Khamenei's adviser issued stark warning for Trump, threatens 'full-scale offensive'
)
Abhijeet Dipke announces indefinite hunger strike after Sonam Wangchuk shifted to hospital
)
Before you buy your Odyssey ticket: The difference between IMAX 70mm and digital explained
&im=FitAndFill=(700,400))
Why Russian fighter jets leave exhaust pipes raw compared to US jets
&im=FitAndFill=(700,400))
From The Odyssey to Troy: 5 movies based on the legendary Trojan War on OTT platforms
&im=FitAndFill=(700,400))
Why Russian aircraft use flexible refuelling hoses compared to US refuelling booms
)
Pakistan in talks for defence pact with Kuwait amid rising US-Iran tensions: Report
&im=FitAndFill=(700,400))
How many missiles does one S-400 have?
&im=FitAndFill=(700,400))
New Friday OTT releases (July 17, 2026): Maa Inti Bangaaram, The East Palace, Desire- 5 new movies and TV shows on Netflix, JioHotstar and more
)
Maha CM Wife Amruta Fadnavis' Yoga Day appearance sparks social media debate over attire | Watch
)
Older than Himalayas: 85mn-year-old Kewra plant reached India 24mn years ago, fossil discovery in Assam shows
&im=FitAndFill=(700,400))
Why Russian fighter jets mount nose camera balls compared to US jets
)
Homer's Iliad written before The Odyssey found inside an Egyptian mummy
)
IND vs ENG, 3rd ODI: When and where to watch live streaming in India?
&im=FitAndFill=(700,400))
'Every launch comes at a price': Why firing an S-400 missile is so expensive
&im=FitAndFill=(700,400))
Why Russian strike fighters seat pilots side-by-side compared to US jets
)
Americans need to prove they are American citizens to visit a national park in US
)
Sonam Wangchuk attacked on Day 20 of hunger strike? 'Object thrown at' activist alleges Cockroach Janta Party's Abhijeet Dipke | Watch
)
UK court denies bail to Indian merchant navy captain held in Russian oil tanker case
)
With all eyes on Vikram-1, Singapore's wealth fund and investment body fuels India's private space era
)
5 times in 40 years: Rare Atlantic Niña could soon grip Earth as Super El Niño tightens its jaws. What to expect?
)
The Odyssey movie review: Christopher Nolan crafts a visual masterpiece that strips the glory from war
)
India’s first night safari: Supreme Court clears massive ₹1,500 crore wildlife project in Lucknow
)
US-Iran war: US sends dozens of refueling jets to Israel as Iran targets Trump's properties: Reports
However, these gains have not yet been realised. It is similar to the 1990s when internet stock valuations couldn't be backed by revenue gains, leading to a recession in the United States in 2001.
Gourinchas said there was a possibility an AI correction could trigger a shift in sentiment and risk tolerance that could lead to broader repricing of assets.
In 2008, the US property bubble burst, precipitating a global financial crisis.
He said that investment and consumption are aiding inflationary pressures without productivity gains.
Experts have predicted that artificial intelligence will disruptthe job market as it will end so many roles. However, it will create new kinds of jobs, offsetting unemployment.