IMF & Bank of England Warn of Potential AI Bubble
Both the International Monetary Fund (IMF) and the Bank of England have signaled concern that optimism about artificial intelligence (AI) is driving equity valuations to stretched levels — raising the risk of a sharp market correction.
Key points
- IMF: Managing Director Kristalina Georgieva told the Milken Institute audience that “uncertainty is the new normal — buckle up,” and noted that optimism about AI’s productivity potential is helping to fuel surging global equity prices. Source: IMF/Milken Institute transcript.
- Bank of England: The Financial Policy Committee has warned that the risk of a sharp market correction has increased and that equity valuations appear stretched, particularly for technology companies focused on AI. The FPC also noted downside risks if AI capability or adoption disappoints. Source: Bank of England — FPC minutes & summary.
Why it matters
Since the release of OpenAI’s ChatGPT in 2022, AI has triggered a surge in investment and new product launches across major tech firms. That enthusiasm has driven large inflows into AI-related stocks and significant deals across the industry — raising questions about whether valuations reflect long-term productivity gains or speculative excess.
Quotes
“Uncertainty is the new normal — buckle up.” — Kristalina Georgieva, IMF
Bank of England FPC: downside factors include “disappointing AI capability/adoption progress or increased competition, which could drive a re-evaluation of currently high expected future earnings.”
Discussion
Is the market pricing in realistic AI-driven productivity improvements, or is this a classic hype cycle that could correct sharply? Share your take in the comments.
References
Originally reported across multiple outlets; links above point to primary sources where available.