Leading financial institutions are worried about a looming AI bubble

Leading financial institutions, including the International Monetary Fund (IMF) and the Bank of England, have expressed concerns about a potential AI bubble that could burst sooner than later. The IMF's managing director, Kristalina Georgieva, has warned that "uncertainty is the new normal and it is here to stay," and that the "fired up by optimism about the productivity-enhancing potential of AI, global equity prices are surging." The Bank of England has also noted the increased risk of a sharp market correction, particularly for technology companies focused on artificial intelligence (AI), and the possibility of a re-evaluation of currently high expected future earnings. The AI craze has been in full swing since the release of OpenAI's ChatGPT in 2022, which has led to a flurry of investment and the development of similar products by major tech companies. However, the financial institutions are cautioning that the AI capabilities might not deliver on the high expectations, which could drive a re-evaluation of the current market valuations.