Threat of AI share crash puts world financial stability at risk, says IMF

The International Monetary Fund has warned that an artificial intelligence share price crash could threaten global financial stability. In its twice-yearly Global Financial Stability Report, the IMF said risks in the financial system are “elevated.” It identified an AI correction as one of three “salient risks,” alongside rising government borrowing costs and a major cyber-attack.

The IMF said the consequences of an AI correction could be global. Beyond the United States, Asian markets would be most exposed, while the UK and euro area might be more insulated. However, investors holding US assets would still be hit.

Athanasios Vamvakidis, deputy director of the IMF’s monetary and capital department, said exposure to US assets, particularly AI, is the highest it has ever been. This supports the global economy through wealth effects today. But a market correction could have broad implications.

The IMF highlighted sky-high valuations and growing debt among AI companies. The “magnificent seven” big tech stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla—account for more than 35% of the S&P 500, up from 12% a decade ago. Their total market capitalisation has risen by more than 50% in two years.

The IMF warned of “growing evidence” that successful AI rollout may not require massive investment by hyperscaler firms. Potential economic gains may not be as large as expected. It pointed to rising leverage from company debt, hedge fund investment and retail borrowing.

It cited $300bn of transactions between hyperscalers and weaker AI firms over three years. These were supplemented by $650bn in debt, in exchange for $1.4tn in future commitments. The IMF said such circular financing could exacerbate a share price correction, heightening forced selling and equity volatility.

Turn any website into clean JSON.

Ready-made scrapers & AI agents

Try Apify