International Monetary Fund (IMF) Managing Director Kristalina Georgieva delivers the opening speech ahead of the International Monetary Fund (IMF)-World Bank Fall Meetings at the Milken Institute in Washington, DC, USA on Wednesday, October 8, 2025.
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The International Monetary Fund and the Bank of England are the latest financial institutions to warn that global stock markets could be in trouble if investor appetite for artificial intelligence deteriorates.
IMF chief Kristalina Georgieva gave investors some frank advice on Wednesday as finance ministers and the central bank prepare to meet in Washington for the fund’s annual meeting next week. “Stay strong. Uncertainty is the new normal and it will continue to be.”
Georgieva said that although the global economy is expected to slow “slightly” this year and next, there are “worrying signs” that market shocks could soon fully test global resilience.
He pointed to the surge in global gold demand, with the price of the yellow metal hitting $4,000 an ounce for the first time this week, as an example of investor anxiety.
The IMF chief also cited the full impact of US tariffs and the sharp rise in stock market valuations amid the AI-driven euphoria as two other warning signs.
“Accommodative financial conditions mask, but do not prevent, some softening trends, such as job creation, but history teaches us that this sentiment can change quickly,” Georgieva said.
His comments came shortly after the Bank of England warned that the risk of a “sharp market correction” was rising and that valuations, particularly for AI-focused tech companies, appeared to be inflated.
“Downside factors include disappointing progress in AI capabilities and implementation, or increased competition, which could prompt a reassessment of currently expected future returns,” the central bank said in its latest meeting minutes on Wednesday.
The IMF and BOE, along with OpenAI’s Sam Altman, JPMorgan President Jamie Dimon, and Federal Reserve Chairman Jerome Powell, have warned of the risk of a stock market correction due to the surge in AI spending.
Huge AI investment
Joost van Leenders, senior investment strategist at Dutch asset management firm Van Ranschot Kempen, said it was likely a coincidence that the IMF and BOE warnings came out on the same day, but it was clear that their messages fit into a broader pattern.
“We’ve been seeing comments like this surfacing over the past few weeks and months, and we’re seeing huge investments in AI that are essentially calling into question the profitability of it,” Van Lenders told CNBC’s “Europe Early Edition” on Thursday.
Asked if a market correction seemed imminent, Van Lenders said: “That’s a good question. It’s hard to say, but if you look at the valuations of the big tech companies in the US, I don’t think they’re overvalued, for example, on a future P/E basis.”
Forward P/E ratio refers to a stock valuation metric that divides a company’s current stock price by its expected earnings per share (EPS) over the next 12 months.
“For example, when you look at the growth in AI investment and investment and the fact that some of these companies are lending to each other and buying each other’s stock, I think those are also signs of a bubble,” Van Lenders said.
“So if you think about there being about five stages of bubbles, we’re probably in stage three. I think that could continue as long as there’s more demand for AI from businesses and individuals. But how far that goes is obviously a big question,” he added.
