The IMF says it is too early to tell whether investors are cooling on artificial intelligence for the long haul. The fund is tracking volatility in AI shares and a US political shift that could slow data center construction.
IMF spokesperson Julie Kozack said on November 12 that it remains too early to tell whether investors are turning away from AI over the longer term. She spoke at a regular press briefing in Washington.
What the IMF said about AI stocks
Kozack described AI equity valuations as still vulnerable to a rethink of how profitable the technology will be over the longer term. According to Kozack: "That overall view that we have taken still remains the case."
The fund is watching two pressures. One is market volatility in AI-linked shares. The other is a political shift in the US that may make it harder to build the data centers AI companies need.
Concentration and debt behind the caution
The worry predates this week's briefing. The IMF's October Global Financial Stability Report flagged concentrated risks tied to lofty AI valuations and rising debt at the largest tech companies.
Hyperscalers, the giant cloud providers that operate massive data center networks, accounted for 10% of global investment-grade bond issuance, according to the IMF. In 2024, that share was less than 1%.
The IMF also modeled a slowdown in spending. Under its downside scenarios, a pullback in AI investment could cut global GDP by as much as 1.1% by 2028, and US output by as much as 1.8%.
Stock market exposure and inflation
The Magnificent Seven tech stocks now make up more than 35% of the S&P 500, compared with 12% a decade ago.
AI investment and data center construction are also seen as major contributors to US inflation. They work alongside energy prices that the Iran war and the closure of the Strait of Hormuz have pushed higher.
The IMF is not declaring a bubble or calling a top. It says the risks it flagged in October remain in place.
Source: Crypto Briefing
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